Retailer Canadian Tire Corp is looking to boost its involvement in the sportswear market and will buy Norway-based Helly Hansen for C$985 million ($771.2 million) including debt.
Canadian Tire, which already owns stores including Sports Check and Hockey Experts which are geared toward outdoorsy millennial shoppers, also reported first-quarter earnings on Thursday that slightly missed analysts’ forecasts.
Under the deal for the company controlled by the Ontario Teachers’ Pension Plan, Canadian Tire also assume $50 million in debt.
“For more than 10 years, Helly Hansen has been an exceptional fit with CTC and this acquisition will strengthen our assortment across all of our banners,” Canadian Tire, chief executive, Stephen Wetmore, said in a statement.
“With our capabilities and Helly Hansen’s trusted global brand and management team, we see tremendous opportunity for CTC and Helly Hansen, in Canada and internationally.”
Helly Hansen CEO Paul Stoneham and the management team, based in Norway, are expected to continue to lead the business.
“CTC provides us with the ideal platform to further accelerate our growth trajectory and also strengthen our Canadian presence. This is a great opportunity for Helly Hansen and our team,” Stoneham said.
“As a Canadian, I am particularly proud to say that Canadian Tire is the new home for Helly Hansen.”
Canadian retail analyst Peter Sklar said he believes the $985 million price tag for Helly Hansen was expensive and even unnecessary. He said: “While the acquisition gives Canadian Tire a platform for the international wholesale distribution of existing Canadian Tire house brands, Canadian Tire is not planning on capitalising on this opportunity for at least several years.
“Canadian Tire’s immediate plans are to instead focus on deepening the relationship with HH by carrying a fuller offering of HH products at all of its banners, which we believe could have been accomplished without acquiring the brand.”
Canadian Tire has just reported a first-quarter profit attributable to shareholders of $78 million, or $1.18 per share for the quarter, down from $87.5 million, or $1.24 per share a year ago. Analysts had expected earnings of $1.38 per share.
Revenue totalled $2.81 billion, up from $2.72 billion in the same quarter last year.