VF to buy Timberland for $2 billion

In news that is sure to have far-reaching consequences within the apparel industry, VF Corp. said this week that it will acquire Timberland Co. as it endeavors to expand outdoor goods sales.

According to a report from Bloomberg, the deal is worth an estimated $2 billion, with VF agreeing to pay about 12 times Timberland's earnings before interest, taxes, depreciation and amortization (ITDA). That figure is higher than the 9.7 median multiple in nine footwear and apparel deals since 2006, the news source reports.

The acquisition is significant because it represents the biggest such move in the industry in at least five years. What's more, the deal will allow VF to expand its outdoor apparel offerings, which include the popular North Face brand. The company said it would increase Timberland's revenue by more than 10 percent each year by aggressively pursuing international markets the company has heretofore been shut out of, and by focusing on business cost reductions.

"It's a fantastic deal strategically and valuation-wise for VF Corp," affirmed Wall Street Strategies retail analyst Brian Sozzi. He noted that the Timberland brand "has global awareness" that VF covets.