This article is part of our Rising Star Portfolio series.
VF (NYSE: VFC ) has offered to buy the boot maker for about $2 billion in cash. Apparently, VF agrees that this socially responsible company holds exceptional growth potential, since it's offering a premium price of $43 per share. Both companies' boards have given the thumbs-up on this deal.
On June 1, Dayana Yochim and I discussed Timberland's bright future for our "Stock Picks With Chicks" series, arguing that investor negativity and stock-price weakness after a "disappointing quarter" were overblown. When it came to growth, we felt Timberland was good to go. Apparently, VF agreed.
Incidentally, Timberland's not the only groovy brand that VF has snapped up over the years. It owns a plethora of well-known brands like The North Face, Vans, and 7 for All Mankind, among others.
Word of Timberland's buyout has increased investor interest in related stocks like Crocs (Nasdaq: CROX ) , Deckers (Nasdaq: DECK ) , and Finish Line (Nasdaq: FINL ) because of the possibility of a buyout. Rather than simply buying stocks they believe could get snapped up by rivals, savvy investors should tread carefully among footwear companies, seeking strong companies that trade at fair value or less.
Last month's announcement that France's PPR planned to buy Volcom (Nasdaq: VLCM ) recalled similarly poignant sentiments about buyouts (and sellouts). When an earnest, authentic, well-run company gets purchased by a bigger one, those who invested in the acquired company might always wonder what could have been.
Still, premium prices and excellent returns take the sting out of such moments. Thanks to the deal, Timberland now represents a double in my Rising Stars portfolio. My original plan was to hold onto Timberland for the very long term, but this positive outcome in the short run leaves little room for complaints.
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