Nike Should Expect Crowd For Cole Haan

  • A number of buyout firms may be candidates
  • Strategics, too, could show interest in brand
  • Multi-billion auction could take a year

There’s only one glass slipper, and a whole lot of pumpkins and lonely rides home. That’s the likely story to come out of the Cole Haan auction. Private equity firms should expect to take on a number of strategic bidders and sources are saying the multi-billion dollar auction of high-end shoe and luxury goods maker Cole Haan will likely be a crowded one.

Nike, the top sportswear company in the world, plans to sell its Cole Haan and Umbro brands to focus on its core namesake, Jordan, Converse and Hurley brands, sister news service Reuters reported. The process will begin immediately and be complete by the end of May 2013, Nike said. Nike acquired Cole Haan, which specializes in leather shoes and bags, in 1988. It acquired Umbro, which makes soccer shoes, in 2008.

Nike, which announced plans in May to deal the popular shoe and leather brand, is moving deeper and deeper into sports merchandise—but don’t take that as a sign of weakness at Cole Haan, one source told sister Web site peHub. It is unlikely Cole Haan will go at the highest end of the EBITDA multiple range (12x EBITDA) similar to boot maker Timberland’s 2011 sale, one source said. That company was sold to VF Corp. in a $2 billion deal last year.

“You’re going to see some large cap PE firms emerge as bidders,” one source said.

Golden Gate Capital, which owns Rocket Dog, as well as Apax Partners, could be interested in Cole Haan, a banker said. “It would be a great PE play.”

Bigger sponsors, such as Leonard Green & Partners LP, which teamed with TPG Capital to take clothing retailer J. Crew private for $3 billion in a 2011 deal, is another potential buyer, one source suggested. Green, of course, just closed a $6 billion private equity fund and of late has shown a penchant for taking on consumer plays, like Whole Foods and J. Crew. Still, at such a high price, even Green may have to partner with another sponsor once again.

Big strategic bidders are expected, too. Sources mentioned bidders like Labelux, the privately run European group, and LVMH, the listed, France-based consumer goods conglomerate, as potential bidders for Cole Haan. VF Corp. is another potential buyer, a source said.

Lion Capital was also mentioned as a potential bidder, a source said, although one that would need to participate in a club deal to complete such a large transaction. Earlier this year, Lion Capital acquired the majority stake in fashion label John Varvatos.

(Jonathan Marino is editor/columnist for peHub; additional reporting by peHub’s Luisa Beltran.)