Both of these Danish shoe companies had become financially weak lately, and Jako Sko actually filed for bankruptcy protection a couple of weeks ago. Their respective operations are now being merged into a single company, called Sanita Footwear, based at Sanita’s head office in Ikast and run by its former chief executive, Claus Thomsen.
With annual sales equivalent to about €40 million, the new company is getting a big equity injection and is expected to make a profit by next year. A Danish holding company, Footwise Holding, has acquired most of the assets of Sanita and Jaco for the equivalent of about $22 million without taking over their debt, out of which very little was owed to suppliers.
Footwise Holding is the property of three shareholders. Thomsen himself has a stake of 20 percent. The balance is divided between two wealthy Danish investors. One is Jesper Klein-Petersen, whose numerous interests included a controlling share in Jaco. The other is Carl Aage Nielsen, who comes from the factoring business and owns among other things a stake in a Danish football team, FC Midtjylland.
One of the major creditors of Sanita was the family of Knud Jeppesen, former owner and chief executive of Sanita. Another potential creditor is Dansko, the American company that had been the exclusive client of Sanita in the U.S. for many years. The American Dansko and the former Sanita have been in litigation for two years over the break-up of their former agreements. A court in Copenhagen has been issuing various rulings, most recently in favor of Dansko.
The former Sanita is now seeking bankruptcy protection from creditors. An executive of Dansko said his company intended to participate in the bankruptcy proceedings. An executive of Footwise felt that both parties should be happy to put behind a long-winded legal dispute that was getting nowhere.
He said savings in operating costs were the main benefits of the new set-up. The back-office functions of Jaco and Sanita are being combined. Sanita Footwear’s Danish staff of about 50 people includes the only five employees of Jaco who have been retained. Jaco’s office at Køge is being shut down. The assets being taken over include the Polish factories of the two companies, which are 80 kilometers away from each other. Each of them employs about 150 people, and they will continue to operate independently because of the different products they make, but synergies will be possible in financing and purchases of raw materials and components.
As previously reported (Shoe Intelligence No. 10-5 of March 3), the Sanita brand is recovering from the break-up of its U.S. deal with Dansko. Its U.S. sales are expected to double this year to about $20 million, making a big contribution to total sales of around $35 million under the brand.
Sanita has just signed up a very strong Italian distributor, Asap, which has been making waves in its country with Kawasaki, another Danish brand that we have previously talked about. It has also signed a distribution contract in Japan and is looking for other distribution partners in Europe. Company officials hope that some of Sanita’s distributors will also want to carry some of the other brands within the group.
For its part, Jaco has been growing through acquisitions in the last years, since its takeover by the Kleinberg Group in 2003, in order to reach the kind of critical mass that Sanita’s new owners are striving for. Jaco’s basic business is the manufacture of comfort shoes in elk leather for the European Dansko, a Swiss-based company that has nothing to do with the American Dansko, with clients also in Germany and the Benelux countries.
In 2004, for example, Jaco acquired a 75 percent share in Bundgaard, a small Danish maker of comfort shoes for children. Three years later it bought a controlling stake in another footwear brand, Highlander.