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SPORTING GOODS

Quiksilver to sell Rossignol ski unit

Chartreuse & Mont Blanc agrees to buy the flagging division for $147 million.

August 28, 2008|Andrea Chang | Times Staff Writer

Orange County surf-wear giant Quiksilver Inc. said Wednesday that it had reached an agreement to sell Rossignol, its flagging winter sports equipment division, in a deal valued at $147 million.

That was less than half what Quiksilver paid just three years ago to acquire Rossignol.

The bid by Chartreuse & Mont Blanc, which is majority owned by Macquarie Group of Australia, comes after Quiksilver announced in January that it was looking to unload Rossignol after several quarters of weak earnings.

If approved, the acquisition would mark the end of Quiksilver's short-lived and tumultuous venture into the ski-equipment business and would return the Huntington Beach company to its roots as an apparel and footwear maker.

Quiksilver said it would use the proceeds from the sale of the Rossignol, Dynastar, Look and Lange brands to repay debt and to focus on its core Quiksilver, Roxy and DC brands. The deal is expected to close later this year.

Chartreuse & Mont Blanc, named for two mountain ranges, is headed by Bruno Cercley, a former chief executive of Rossignol.

Quiksilver's acquisition of Rossignol was uneasy from the start.

The 2005 deal -- valued at $320 million in cash and stock -- made Quiksilver a major player in the winter sports-gear business. At the time, Quiksilver CEO Robert B. McKnight Jr. called the purchase "another milestone" for the company and said Rossignol would help extend Quiksilver's reach.

But analysts quickly voiced concerns that the pairing was a mismatch and that Rossignol would slow Quiksilver's steady growth.

The division soon became a financial drag. Last year Quiksilver began cutting costs associated with Rossignol and entertained the possibility of selling the brand.

"It was a problem from the beginning," said Jeff Mintz, an analyst with Wedbush Morgan Securities in Los Angeles. "It's a very different business, the hard-goods business compared to apparel. . . . The truth is that it was a bit of a stretch for Quiksilver."

The company's roots in the surf and skate industries also left it ill-prepared to deal with the hard-to-predict Southern California snow season.

In March 2007, Quiksilver announced that its fiscal first-quarter profit plummeted 87% from a year earlier and blamed the earnings plunge on a particularly miserable winter sports season.

Killer Dana Surf Shop in Dana Point carries many Quiksilver products, including wetsuits, apparel and accessories, but it doesn't stock any snow gear, said Alex Von Taube, the store's general manager.

"Snow is really hard -- if you have a bad year, the retailer can't get rid of it," he said. Quiksilver "went into something that they knew nothing about."

Shares of Quiksilver rose 88 cents, or 11.34%, to $8.64 on Wednesday.

Chartreuse & Mont Blanc's offer comprised 75% cash and 25% debt.

"They certainly didn't get the price for it that they would have hoped for," analyst Mintz said. "But I think in the end, they're better off."

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andrea.chang@latimes.com

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