Nautica Enterprises, Inc. (Nasdaq: NAUT) today announced that it has signed a definitive merger agreement to be acquired by VF Corporation (NYSE: VFC). Pursuant to the merger agreement, VF will pay Nautica shareholders $17.00 per share in cash. The Company will also pay approximately $14.6 million, net of tax, to cash out employee stock options, for a total consideration of approximately $585.6 million.
Harvey Sanders, Chairman, President and Chief Executive Officer of Nautica Enterprises, Inc., commented, ''We are thrilled that a transaction with VF delivers significant value to our shareholders in the near term while continuing to offer substantial opportunities for our people and our brands over the long term. The all-cash offer of $17.00 represents an approximate 58% premium to the closing price on June 10, 2003, the date prior to the initial proxy filing by dissident shareholders, as well as a 28% premium to the closing price of Nautica shares on July 3, 2003. At the same time, Nautica will become part of a larger company that shares our values, integrity and culture.''
Mackey J. McDonald, Chairman and Chief Executive Officer of VF, said, ''Today marks an exciting milestone for both VF and Nautica. VF will gain a powerful lifestyle brand that extends across multiple product categories, including men's sportswear and jeanswear, in addition to a broad array of licensed categories including men's tailored clothing, dress shirts, accessories, women's swimwear, fragrances, eyewear, watches and home furnishings. It also provides additional diversification to our business mix by strengthening our presence in department stores. At the same time, Nautica will benefit from VF's superior supply chain, inventory and brand management capabilities.''
Mr. Sanders continued, ''We are very proud of what Nautica has accomplished over the past 20 years, and gratified that VF recognizes the value and potential of our businesses. I look forward to supporting Mackey and his team as we transition our business to become part of a larger organization that will afford us the leverage to grow our various businesses and move forward.''
David Chu, vice chairman of Nautica Enterprises, Inc., will assume responsibility following the merger for the Nautica brand, overseeing global design, product development and marketing. ''I'm excited to be joining forces with such a strong partner and I view this transaction as the best means of maximizing the full potential of the Nautica brand. This year marks Nautica's 20th anniversary, and I view this transaction as a fitting way to celebrate both the longevity of the brand as well as its bright future. I'm personally looking forward to this new endeavor,'' he said.
Nautica will continue to maintain its headquarters in New York City and its distribution center in Martinsville, Virginia.
Pursuant to the merger agreement, VF will pay Nautica shareholders $17.00 per share in cash.
The Company will also pay approximately $14.6 million, net of tax, to cash out employee stock options, for a total consideration of approximately $585.6 million.
The boards of directors of both companies have approved the merger. The merger is subject to Nautica shareholder approval, receipt of government approvals and other customary conditions. The merger is not conditioned on financing. In connection with the transaction, VF has obtained commitments from Harvey Sanders and David Chu to vote all Nautica shares owned by them in favor of the merger, representing a total of approximately 10% of the current shares outstanding.
VF has separately entered into an agreement with Mr. Chu to acquire from him his rights including his right to receive 50% of the net royalty income from licensing the Nautica trademark. Under this agreement, VF will pay Mr. Chu $38 million upon the closing of the transaction and $33 million on each of the third and fourth anniversaries of the closing. Mr. Chu will also have the right to receive payments in each of the next five years in the event an annual gross royalty revenue threshold is exceeded.
The Company also noted that its 2003 Annual Shareholder Meeting will be postponed and a new date will be announced shortly. The Company expects that the original record date of May 29, 2003 will remain in effect for the meeting.
In connection with the merger, Rothschild Inc. acted as financial advisor to the Company and both Rothschild Inc. and Bear, Stearns & Co. Inc. rendered fairness opinions to the Company.