New Balance will form a new company with Berkshire Partners that will take over The Rockport Company from the Adidas Group. The new company will also acquire the Drydock Footwear business of New Balance, which comprises its three main brands of casual and comfort shoes: Aravon, Dunham and Cobb Hill.
We understand that the new company will be called The Rockport Group, and that it will be run by Vivian Infantino, a former president of Rockport. Five years ago he left Clarks North America after running it for many successful years. A year later, in 2011, he joined New Balance to head up Drydock, with a minority stake in the business. Infantino's sales director at Clarks, Joe Salzano, joined him at Drydock in 2013.
Boston, which is home to New Balance and Rockport, will remain the hub for the new company. Berkshire Partners, which has nothing to do with Berkshire Hathaway, is a Boston-based investment firm whose shareholders include Ken Pucker, former chief operating officer of Timberland. It made an unfortunate investment in MBT in 2007, and cashed out of it in 2012.
The new owners have agreed to pay $280 million for Rockport, close to one year's worth of sales. Adidas had reportedly put forward an asking price of $400 million for Rockport when it announced last spring its intention to sell the company, which it had inherited through its acquisition of Reebok International nine years ago.
The payment will be made mostly in cash, but also in credit notes. Adidas will record an unspecified, non-operational charge worth a double-digit amount in euros. The group says that Rockport has performed very well over the years. However, Adidas has decided to focus on sport. The move will reduce complexity and allow the group to pursue its target consumer more aggressively with the Adidas, Reebok and TaylorMade brands, the German company added.
The sale of Rockport resembles in some ways the sale of Cole Haan by Nike a few years ago. Adidas has been unable to lift Rockport's sales significantly or to diversify its business into the women's fashion segment. Adidas has been more successful in the casual fashion segment with Adidas Originals, similarly in a way to New Balance with its retro shoes.
A big competitor of New Balance, Asics, is now launching the Asics Tiger brand all over Europe to target the lifestyle segment of the sports market with a line of sports-inspired sneakers with updated performance technologies. The Japanese company has two other brands for the non-athletic market: Onitsuka Tiger for fashion and Pedela, a line of walking shoes that is only sold in Japan.