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K2 Plans Another Addition to Roster

The sporting goods firm says it will buy Worth, a baseball and softball equipment maker.

August 01, 2003|Elizabeth Kelly | Times Staff Writer

Sporting goods manufacturer K2 Inc. said Thursday that it intends to buy privately held ball and bat maker Worth Inc., a deal that would make the Carlsbad, Calif.-based company one of the top U.S. producers of baseball and softball equipment.

In March, K2 added Rawlings Sporting Goods to its roster of brands, which include Shakespeare fishing rods, Olin skis, Ride snowboards and Stearns water sports gear.

On the New York Stock Exchange, K2 shares rose 61 cents to $16.50, a 52-week high. The stock has gained 75% this year.

Company executives say the acquisition of Worth, a family-run company based in Tullahoma, Tenn., will push K2 to the forefront of the $448-million baseball and softball equipment industry by filling gaps in the Rawlings product line. Worth also has the capability of manufacturing its own bats, which Rawlings does not.

K2 Chief Executive Richard Heckmann said in a statement that the transaction was "exactly in line" with his company's strategy of combining leading brands to create a mix of sports products.

K2 said it does not plan to buy another major baseball equipment producer but will continue to seek out smaller acquisitions to buttress its winter sports, fishing, water sports and baseball lines.

Company executives said they expected to complete the Worth purchase in 30 to 45 days.

Analysts said consolidation is becoming more common as sporting goods companies attempt to become more efficient.

The combination of K2 and Worth is "an excellent fit," said Rommel Dionisio, an analyst with Roth Capital Partners. K2 can build its business by offering a fuller range of products to retailers, while Worth gains exposure through K2's broader distribution lines, he said. "It's a pretty complementary production," Dionisio said.

Both parties declined to disclose the terms of the deal, but Dudley Mendenhall, K2's senior vice president of finance, said the purchase price is immaterial, or less than 10% of the company's assets and revenue.

In fiscal 2002, K2 posted net income of $12.1 million on revenue of $582.2 million. Last year, Worth racked up $57.8 million in sales of its metal bats, softballs and gloves.

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