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Trekking farther afield

Family agrees to sell Timberland to N.C. company for $2b to expand outdoor brand’s market reach

VF Corp. wants to increase Timberland’s annual revenue 64 percent by 2015 to roughly $2.3 billion. VF Corp. wants to increase Timberland’s annual revenue 64 percent by 2015 to roughly $2.3 billion. (Suzanne Kreiter/ Globe Staff)
By Jenn Abelson
Globe Staff / June 14, 2011

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Timberland Co., a storied New England brand built on big yellow boots, is looking to sell the family-run business to the world’s largest apparel maker in hopes of expanding its presence worldwide.

The proposed $2 billion takeover by VF Corp. of North Carolina would bring Timberland — favored by eco-friendly, outdoorsy consumers — under the same roof as powerhouse brands such as North Face, Vans, and Wrangler.

VF says it wants to capitalize on Timberland’s momentum — which has picked up speed over the past year as it has intensely focused on footwear — and grow the company’s annual revenue 64 percent by 2015 to roughly $2.3 billion. Analysts said that under VF’s leadership, Timberland should be able to make its stores more profitable, improve its line of women’s clothing and accessories, and extend the brand across China and Europe.

VF plans to keep Timberland’s Stratham, N.H., headquarters, but did not disclose whether there would be jobs cut because of the consolidation. It is also unclear how long members of the Swartz family, the visionaries who founded Timberland and are involved in Boston philanthropic circles, will stay on board. The company, born from the Abington Shoe Co., created the first guaranteed waterproof boot under the Timberland name in 1973 and manufactured its first boat shoe six years later.

“Everyone at Timberland is very proud to become part of the most important outdoor coalition on Earth,’’ said chief executive Jeffrey Swartz, who is part of the third generation of the Swartz family to lead Timberland. “We are so excited to pair up with the capabilities and strength of VF.’’

The cash deal, at $43 per share, represents a 43.4 percent premium over Friday’s closing price on the New York Stock Exchange. The Swartz family, who collectively control about 73.5 percent of the company’s combined voting power, have agreed to approve the deal on July 26 if it hasn’t been terminated by then.

Rumors of a Timberland buyout have swirled for a decade, with potential suitors including companies such as Nike, Adidas, and Stride Rite. Ken Stumphauzer, an analyst with Sterne Agee Capital Markets based in Alabama, said VF may have to come up with more money if it wants Timberland — he expects a competing bid from another company.

“You could anticipate a Nike or PPR, the French luxury conglomerate, coming in. There are few real large global brands that can move the needle in the outdoor space and Timberland is one of them,’’ Stumphauzer said. “The outdoor space is something that has eluded some of these bigger companies.’’

Timberland, which struggled for years even before the recession, has improved results in recent quarters with a maniacal focus on cementing its reputation as the premier outdoor footwear firm in the United States.

The company is trying to appeal to a new generation of consumers with environmentally-conscious products such as Earthkeepers and Mountain Athletics. The brand has also found success with its more sophisticated Abington Collection and Timberland Boot Co., selling shoes that can cost up to $325 a pair.

“The combination of VF and Timberland will create a $10 billion apparel and footwear powerhouse anchored in outdoor and action sports, our largest, most profitable, and fastest- growing business,’’ Eric Wiseman, VF’s chief executive, said during a conference call yesterday with analysts.

VF can provide the kind of capital and scale that Timberland needs to grow the brand, and still will allow the boot maker to retain its unique culture that cares deeply about the environment and social responsibility, according to Madison Riley, a managing director for Kurt Salmon’s, a consulting office in Boston.

“VF allows brands they acquire to maintain their culture and personality and remain independent. They really do not try to change all the good in those that they acquire,’’ Riley said.

Timberland has repeatedly been recognized by Fortune magazine as one of the top companies to work for, with employee perks such as a $3,000 stipend toward a hybrid vehicle and 40 hours of paid volunteer time. The shoe maker has also provided more than $10 million to Boston’s City Year over the last decade to help expand the urban service program to more than a dozen cities across the United States.

“Today is a very magnificent day and a bittersweet day,’’ Swartz said during yesterday’s conference call. “But I believe we have done what’s right for our shareholders.’’

Swartz said he is “absolutely committed’’ to working with VF’s leadership team through the transition. As part of the deal outlined yesterday, he and his father, Sidney W. Swartz, agreed to not participate in any competing business for three years after the transaction is completed.

“We know from close inspection that VF has done an extraordinary job of respecting the different brands they’ve required,’’ Jeffery Swartz said. “I have a deep affection for this place and for this brand and a belief in it.’’

Jenn Abelson can be reached at abelson@globe.com.