In a move that has been deemed “expensive” by some analysts, the Canadian retailer Canadian Tire it to acquire the Norwegian high-end outdoor clothing and equipment group Helly Hansen.
The deal is understood to have taken 18 months to come together and will see Canadian Tire, which is one of Helly Hansen’s largest customers, paying C$985m (US$772m) for the Oslo-based group in an acquisition which will help Canadian Tire strengthen its overseas presence and diversify its interests further.
Whilst seen as a good strategic fit, BMO Capital Markets analyst Peter Sklar suggests the deal was an expensive one for the Canadian company, given its 18 to 20 times multiple of enterprise value to operating earnings on a trailing basis compared to Canadian Tire’s equivalent measure which sits at 10 times.
“While the growth may justify the valuation, we believe that managing a high-end, high-growth, international brand represents a shift in strategy for Canadian Tire, and introduces all the associated uncertainties,” Sklar added.
Founded in 1877, Helly Hansen, which is being sold by the Ontario Teachers’ Pension Plan, designs and manufactures technical performance products for the sailing, skiing, mountain, urban, rainwear and workwear markets and its products are sold in over 40 countries.
“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,” Canadian Tire chief executive Stephen Wetmore said.
The deal is expected to close in the third quarter of this year.