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Australian Firm to Buy Skateboard Company

June 22, 2002|LESLIE EARNEST | TIMES STAFF WRITER

An Australian shoemaker plans to acquire El Segundo-based Kubic Marketing Inc., one of the world's largest skateboard companies, in the latest effort to push the edgy sport of skateboarding into the mainstream and commit deeper corporate dollars to fuel its growth globally.

Globe International Ltd. plans to pay up to $46 million to buy Kubic, parent of bad-boy brand World Industries, the companies said Friday.

The acquisition will move another large corporation into Southern California's once tightly knit youth market scene, while adding another dose of corporate respectability to a sport that was born of rebellion. Earlier this year, Beaverton, Ore.-based athletic shoe giant Nike Inc. purchased Hurley International, a Costa Mesa-based youth apparel designer that is popular with skateboarders and surfers.

Globe, which already distributes a stable of youth brands in Australia, will issue about 47 million shares to raise money for the purchase. The acquisition is expected to spur production of apparel and shoes bearing Kubic brands, which include Blind, Darkstar, Tensor and enjoi. It also allows Globe to move into skateboard and hard goods in a major way, insiders said.

"It's a big deal," said Miki Vuckovich, editor of Transworld Skateboarding magazine. "It's a great opportunity for [Globe] to own several of the top brands they've been distributing. They can now control the licensing, distribution and how those brands are managed globally."

The deal also will strengthen the Kubic brand and could make life tougher for companies that make skate shoes, including Santa Fe Springs-based Vans Inc. and Sole Technology Inc. in Lake Forest, industry insiders said.

Management will remain in place at Kubic's two divisions, World Industries and Dwindle Distribution, and no layoffs are anticipated, the company said. Other than planned expansion, nothing is likely to change, said Robert Valerio, Dwindle's president.

"They're still going to appeal to youths' interest in rebelling," he said. "We're just happy to have a larger parent company that can fund our growth."

"We are joining up with one of the largest shoe companies in skateboarding," Valerio added. "That means together we have the opportunity to be one of the leaders in the action sports industry for the entire world."

The popularity of skateboarding has grown steadily in recent years, swiping some of the sheen from the surf wear apparel market.

Last year, the nation's 16 million skateboarders--or skateboard wannabes--generated $1.4 billion in sales, up 27% from the year before, according to Skateboarding Business Magazine. Those numbers don't include lower-priced boards sold by mass merchants such as Wal-Mart Stores Inc. and Toys R Us Inc.

Kubic claims to be the world's largest high-end, hard-goods skateboarding company. It has 20% of the market for skateboards priced more than $100, Valerio said.

As the sport infiltrated suburbia and rolled into middle America, more businesses tried to reap profits from it, pouring money into the industry and cranking out clothing and shoes geared to skaters.

Kubic was founded 15 years ago by professional skateboarders Steve Rocco and Rodney Mullen. Then called World lndustries, it operated for years in Huntington Beach.

As the brand gained favor with youths, World irked parents with skateboard designs featuring crack pipes, decapitated babies and the pope on fire.

In 1999, an Orange County couple led a letter-writing campaign against World over a promotion that offered a free board to people who "relinquish their souls."

As it grew, the company also had difficulty with product shortages, which at times cost it sales. Globe's heft and experience should help going forward, analysts said.

"Globe has a pretty strong global network and could probably aid World in the globalization of their hard goods," said Mitch Kummetz, an analyst with Wedbush Morgan Securities.

The purchase will not change how Kubic's brands are distributed, which largely has been through small stores that sell surf and skate products, the company said.

But Kummetz said Globe may broaden the distribution of World Industries shoes for youth by selling them in large department stores, such as J.C. Penney Co., Sears, Roebuck & Co., and Kohl's Corp.

"If you really want to go after kids' shoes, I believe you have to go through department stores and the moderate chain retailers," he said. "Now they have the muscle behind them to go after it."

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