Wolverine World Wide announced it has reorganised operations in China for both its Saucony and Merrell brand, in addition to the sale of its Asia-based leather business.
SEE ALSO: Wolverine sells Hush Puppies Greater China intellectual property to Beijing Jiaman Dress
The footwear and apparel firm said it has entered into new agreement with Xtep, its current Chinese joint venture partner, for the sale of a minority ownership interest in the entity that owns the Saucony intellectual property in China, and the sale the company’s equity interest in the Merrell and Saucony joint venture entities.
The deal is worth some USD 61 million.
Wolverine Worldwide first formed a joint venture with Xtep in 2019 to launch the Merrell and Saucony brands in China.
Under the joint venture agreement, Xtep held the option to purchase a 40% minority ownership interest in the entity that owns the Saucony intellectual property in China if the business met certain financial targets. Due to the early success and profitability of Saucony in China, the U.S. company and Xtep have agreed to accelerate the exercise of this purchase option.
Wolverine also agreed to sell its equity interest in the Merrell and Saucony joint venture entities to a wholly-owned subsidiary of Xtep, transitioning the business from a joint venture model to a license and distribution rights model. As a result, Xtep will exclusively carry out the development, marketing and distribution of footwear, apparel and accessories for the Saucony and Merrell brands in China
The new operating model is expected to further leverage Xtep’s expertise and significant resources in China, “unleashing the brands’ full potential in this key market,” according to a press release.
Based in China, Xtep is a vertical player in the fast-growing sportswear market, with over 8,200 stores in Asia-Pacific, North America, and EMEA, and a network of distributors and shopping mall operators.
What’s more, Wolverine Worldwide said its has entered into an agreement to sell its Asia-based Wolverine leathers business to Interhides Public Company Limited, a current materials vendor of the company, for approximately USD 9 million.
“We’ve taken fast, bold, and decisive actions to stabilise the company today, while working to transform Wolverine Worldwide for the future,” said Chris Hufnagel, president and chief executive officer.
“Our actions over the past four months have served to simplify our business model, reduce our cost structure, and strengthen our balance sheet. While our work isn’t done, we enter the new year with a clear vision for the future, enhanced ability to invest in our brands and platforms, and ultimately, a better position to deliver stronger returns for our shareholders.”