Dive Brief:
- Canadian outdoor brand Roots Corporation has entered into an agreement with Marquee Brands to be acquired, according to a Thursday company press release.
- Marquee Brands has partnered with JM&A Design and Development to serve as the core operating partner of Roots.
- Shareholders are being offered 4.10 Canadian dollars (around $2.98) per common share in cash, a 36% premium to the stock’s closing price as of March 2. The Roots board has unanimously recommended that shareholders vote in favor of the transaction.
Dive Insight:
In a deal that will take Roots private, an emphasis is being placed on preserving the Canadian roots of the outdoor brand.
“Taking on Roots is an incredible honour, and our strategic partnership with JM&A ensures the brand remains anchored in Canadian culture,” Heath Golden, CEO of Marquee Brands, said in a statement. “With that foundation in place, we see significant global opportunity to extend Roots into new categories, markets and consumer segments, while remaining true to all that makes the brand distinctive.”
The transaction is “designed to preserve all that makes Roots uniquely Canadian,” and the company will continue to be operated in the country.
Operating partner JM&A will oversee the design, development, manufacturing and distribution of men’s and women’s apparel and take on retail and e-commerce operations across Canada and the U.S. That includes the Roots fleet of more than 100 North American stores.
Roots began a strategic review with the possibility of selling its business in March. That process resulted in multiple proposals, per the company.
The retailer will join Marquee Brands’ portfolio, which includes Sur la Table, Laura Ashley, Destination Maternity, BCBG and A Pea in the Pod, among others. Marquee Brands acquired a majority stake in Italian fashion house Roberto Cavalli this spring.
In 2020, Roots’ U.S. unit filed for Chapter 7 bankruptcy with plans for the subsidiary, Roots USA Corporation, to close seven of its stores.
Since that time, the retailer launched a multiyear turnaround strategy, which in part included closing underperforming stores.
In its latest quarter, Roots total sales were CA$42.6 million, a 6.5% increase compared to the year-ago quarter, while comparable sales increased 3.2%. However, net loss widened to over $10 million, up more than 27% year over year.
