Billabong purchases
Honolua SurfThe Australian company will pay
between $10 million and $15 million
for the Hawaii retailer's 19-store chain
Billabong International Ltd., Australia's largest publicly traded surfwear manufacturer, has acquired the Honolua Surf Co. apparel brand and its 19-store retail network.
The deal closed Saturday.
Depending on the eventual payout, the acquisition will cost Billabong between $10 million and $15 million.
The acquisition will be funded by debt and paid in two installments, according to Billabong. The initial payment to Honolua is 75 percent of the agreed purchase price. After three years, Honolua will receive 25 percent of the initial purchase price plus an incentive-based payment calculated on the increase in retail profits over the period. In addition, Honolua's co-founders, Tom Knapp and Randy Blumer, receive an annual earnout over three years based upon continued employment.
Honolua owns 17 stores in Hawaii on Maui, Oahu, Kauai and the Big Island and two in Las Vegas.
The Honolua stores derive about 60 percent of their business from Honolua-brand apparel, according to a statement from Billabong, Billabong is among the biggest suppliers of other established surf brands the stores already carry.
Knapp, president of Honolua, said he and Blumer, the vice president, will continue on in their current positions.
"Randy and I are both staying on," Knapp said. "We'll retain the same titles. I think this is going to allow us to take Honolua Surf to the next level."
Knapp has run the company since 1995 and is former president of the Surf Industry Manufacturers Association. Blumer was a former vice president of merchandising and operations at retailer Pacific Sunwear.
Billabong Chief Executive Derek O'Neill described Honolua as "an emerging brand with significant potential."
"It is complementary to the core Billabong brand and brings opportunities for a tightly focused approach to a much broader demographic spread of customers," he said.
O'Neill said he saw an opportunity for Honolua to expand its sales through Billabong's existing international network.
Billabong, founded in 1973, has six of its own 18 retail outlets in the United States. There are two stores in Hawaii, one in Orlando, Fla., and three in Southern California. But the company has a presence in 60 countries and ranks as one of the top three international surfwear companies.
Knapp said Billabong will maintain a separate retail division for its own stores.
Besides manufacturing surf-wear, apparel and other accessories, Billabong sponsors professional surfing, skateboarding and snowboarding events.