Rocky Shoes & Boots is acquiring the EJ Footwear Group for a total of $97.7 million in cash and shares. The American company owns the Georgia Boot and Durango brands and has important footwear licenses, mostly with a North American scope, including Dickies and John Deere.
The acquisition, which boosted Rocky’s stock market price, will more than double Rocky’s annual revenues to a projected $280-285 million in 2005, generating net profit of $10.9-11.3 million for the year, while diversifying its operating platform and reducing its seasonality. Rocky Shoes & Boots has secured a new $148 million credit facility with GMAC Commercial Finance and American Capital to fund the acquisition and replace an existing revolving credit line.
Rocky will pursue several cross-selling opportunities with EJ’s brands. One of the first will likely involve EJ’s Lehigh brand, to which Rocky may add its own branded apparel and glove business. Lehigh, which competes in the direct-to-business safety and occupational footwear sector with the likes of Iron Age and Wolverine World Wide’s Hytest brand, is said to account for approximately 35 percent of EJ’s revenues. Georgia Boot accounts for about 42 percent of its sales, Durango for 15 percent and Dickies for 6 percent. The John Deere and Georgia Boot brands have most of their exposure in agriculture, hardware and lawn care establishments.
Rocky is unlikely to realize any major cost savings from the transaction during the first 9 months of 2005. EJ sources all products in China, and Rocky will consider tapping into its Asian sourcing capabilities. Jerry Cohen, CEO of EJ Footwear, will not continue under Rocky’s ownership. Other key members of the company’s management team will remain on board.