In a move to draw upon the resources and reach of an established global partner, prAna, a leading apparel brand in the outdoor industry, today announced it has joined forces with Liz Claiborne Inc. Under the terms of the acquisition agreement, prAna co-owners Beaver and Pam Theodosakis and Demian Kloer will remain at the helm of prAna, maintaining the brand's essence and commitment to high-quality products and environmentally sensitive business practices. PrAna is expected to generate annual net sales of approximately $30 million in fiscal 2005.
A distribution strategy that emphasizes core specialty retailers, effective grass-roots marketing, and
sustainable business practices have all played an important role in connecting prAna with its core climbing and yoga customer base.
Through its relationship with Liz Claiborne Inc., prAna will have the ability to tap into the Company's global sourcing network, financial capital, and breadth of operational resources. This will enable prAna to
strengthen its brand and relationships while continuing to deliver excellent service to its customers.
“We are excited to partner with Liz Claiborne and its management because of their reputation for operating responsibly and an established worldwide infrastructure that we will draw upon to further enhance our Company,” said Beaver Theodosakis, co-founder of prAna. “One of the primary reasons we selected Liz Claiborne was because of our ability to maintain a significant economic interest and independence in running prAna.”
Demian Kloer, co-owner of prAna, said, “We believe Liz Claiborne's global reach and vast design and sourcing capabilities will add to the quality of our product offerings with innovative and relevant styles while also
building on our back-end technology to facilitate orders and streamline administration. In the end, we expect this relationship to enable prAna to devote more resources to areas that help our core network of retailers increase sales and profitability.”
PrAna co-founder Pam Theodosakis said, “We really connect with the people at Liz; they are amazing! They have a deep understanding of and respect for our business and they support our company values and ethics. I am so excited
about the access to their design resources and trend forecasting – which will take our designs to the next level!”
Commenting on the acquisition, Paul R. Charron, chairman and chief executive officer of Liz Claiborne Inc., said: “PrAna is quickly becoming one of the most influential brands in the outdoor lifestyle industry, having developed a reputation for coupling style and technical excellence with thoughtful and responsible operating practices. We are pleased that prAna co-owners Beaver and Pam Theodosakis and Demian Kloer will continue to drive the Company as it is their vision and leadership that created prAna. A global strategic partner like Liz brings a high level of intellectual and financial capital
to the partnership that will help Beaver, Pam, Demian and their team to successfully execute prAna¹s diversification and growth strategies.”
Over the last several years, Liz Claiborne
Inc. has acquired a number of independent and highly reputable apparel companies and has a proven track record for preserving the brand's identity and autonomy and allowing business owners to drive the business and
front-end operations. These brands include companies like Lucky Brand Jeans, Juicy Couture, Sigrid Olsen and Mexx. PrAna represents Liz Claiborne's first step into the outdoor apparel and lifestyle arena.
“This acquisition allows Liz to partner with one of the strongest trending brands in the high-growth active, outdoor and yoga industries and provides us further channel diversification into select outdoor stores and specialty retailers through the prAna brand,” continued Charron.
“This relationship goes far beyond the bottom line as we are highly impressed by Liz's brand-building capabilities and corporate commitment to people, fair trade and the environment. We have a great opportunity to
share best practices in these areas. In fact, this has already begun with Liz Claiborne adopting prAna's Natural Power Initiative (NPI) that substantially exceeds our initial commitment, making the overall NPI benefits far more significant,” added Beaver Theodosakis, referring to a
separate announcement today in which Liz Claiborne announced its adoption of prAna's NPI. The combination of Liz Claiborne and prAna under the NPI will help prevent the emission of 57,270,000 pounds of greenhouse gases, or the equivalent of removing 5,412 cars from the road, with wind power purchased through 3 Phases Energy Services, a Green-e certified wind power provider.
“We are extremely pleased to adopt prAna's Natural Power Initiative. We were attracted to prAna not only for its notable business model and significant results, but also for its ability to succeed while promoting social consciousness through sustainable business practices,” said Paul R. Charron, chairman and chief executive officer of Liz Claiborne Inc. “PrAna fits both strategically and culturally into our portfolio and we welcome the
team into the Liz Claiborne family of brands.”
“Our partnership with Liz Claiborne is far more fulfilling than just a business deal. Liz's adoption of our Natural Power Initiative is a great example of our cultural compatibility and shared philosophies that will only
compound prAna's independent influence to create positive change,” said Beaver Theodosakis, founder of prAna. “Liz Claiborne's contribution substantially exceeds our initial commitment, making the benefits of the Natural Power Initiative far more significant and moving us well within the Top 25 corporate partners of the EPA Green Power Partnership.”
With the addition of Liz Claiborne's commitment, prAna's Natural Power Initiative collectively offsets 41,500 electrical megawatt hours, preventing the emission of 57,270,000 pounds of greenhouse gases, or the equivalent of removing 5412 cars off the road or planting 7090 acres more than 11 square miles of forest.
PrAna launched its Natural Power Initiative this fall, offsetting the power
of 250 of its retailers, 100 percent of its headquarters and all of the
homes of its full-time employees. For 2006, this alone is estimated to
offset approximately 16,500 megawatt hours. PrAna plans to eventually offset
100 percent of the electricity from its entire North American dealer base of
approximately 1,000 retail partners as well as its contracted U.S.-based
sewing facilities to deliver clothing “made with certified green-e,
wind-generated power.”
Liz Claiborne Inc.'s purchase of 25,000 megawatt hours* prevents the
emission of approximately 33,037,500 pounds of greenhouse gases from
entering the atmosphere. This is equivalent to taking 3,121 average
passenger vehicles off the road and planting 4,089 acres of forest per year.
PrAna has elected to offset specific electricity usage through the purchase of equivalent Green-e certified tradable renewable energy certificates (RECs). These specific RECs represent the environmental benefits of clean wind power energy production as replacement for other non-renewable energy sources from regional and national electric grids. The prAna Natural Power Initiative RECs are purchased through 3 Phases Energy Services,a Green-e certified wind power
provider. By purchasing these RECs, prAna and Liz Claiborne Inc. are investing in the future of wind power, helping construct new wind farms and bolstering existing farms to create a wider base for future wind power production.
The acquisition price is currently estimated to be $34.4 million, consisting of an initial payment of approximately $32.5 million (representing 60% of prAna's initial valuation) and the retirement of debt at closing
(approximately $1.9 million), plus additional payments based upon a multiple of prAna's earnings in fiscal years 2008, 2009 and 2010. Consummation of the transaction is subject to customary closing conditions. The transaction
is expected to close in the fourth quarter. The Sage Group, LLC, a Los Angeles based, middle-market, investment bank represented prAna in the transaction.
