Deal in Focus: Herkules acquires Didriksons

The healthy lifestyle trend is gaining momentum with consumers globally, which is reflected in their choice of diet and exercise but also in the accompanying demand for sporty and functional clothing. "We see a trend of exercising and being more active today," says Herkules Capital partner Sverre Flåskjer (pictured left). Flåskjer led the Didriksons deal, and told unquote" he had been interested in the sector for a long time.

Founded in 1913 with its roots in Grundsund, Didriksons originally manufactured oil garments for fishermen on the west coast of Sweden and went through a brand reboot in 1998 in Sweden's textile centre Borås, moving into functional and waterproof sportwear. The product range includes rain sets, jackets, bottoms, tops and accessories. Today the company has its own distribution network in Sweden, Norway and the UK and is represented in 19 countries.

Didriksons saw a 43% increase in pre-orders before the summer and the business has experienced strong growth during the last 10 years under the leadership of CEO Sören Andreasson (pictured right). "We felt the need to bring in private equity owners with their contact network, experience and knowledge in order to expand the company internationally," says Andreasson. He contacted the Norwegian GP after having chosen a buyout firm they would be comfortable collaborating with. Herkules was one of the few investors that had exclusivity in the negotiations, which took three months.

The deal, made via Herkules IV, is expected to complete by the end of January. CEO Andreasson, who acquired the company in 1998, and other key employees will hold a significant minority stake following the transaction.

Herkules also owns Odlo, a European functional sportswear brand, which it acquired in May 2010 from TowerBrook Capital Partners. Hünenberg-based Odlo distributes branded sportswear in 20 countries, with core operations in Germany, Switzerland, France, Italy and Austria.

Odlo CEO Jonas Ottoson, former CEO of Peak Performance, assisted Herkules with the Didriksons deal and will take a seat on the board of directors. Peak Performance was founded in 1986 in the Swedish ski resort Åre by Stefan Engström and Peter Blom and is today Scandinavia's largest clothing brand within functional sport fashion with a presence in more than 20 countries.

Active within the same sector, Didriksons has a similar product range as Peak Performance, but is more family-oriented than youth-focused Peak brand and caters to a more affordable price segment. According to Flåskjer, Didriksons will not follow Peak Performance's strategy, save for the focus on international expansion. Andreasson concurs: "Didriksons and Peak Performance have two different business ideas and separate strategies."

Herkules will support Didriksons as it launches new products and develops its international expansion ambitions. Focus will be on growth in northern Europe: Germany, which has the largest sports market in Europe; the UK, where Didriksons recently set up a new company; as well as Finland and Russia, where Didriksons already has a market position. "While Europe has seen a rather slow growth, Norway has a better development," says Flåskjer.

With 45 employees, Didriksons has European brand sales of close to SEK 450m. Net sales in 2012 amounted to SEK 284m with an EBITDA of SEK 54m. "Hopefully we will have fulfilled our international expansion goals within the next 5-7 years, by the time of Herkules' exit," says Andreasson.

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Herkules Capital – Sverre Flåskjer

This deal was originally covered on January 9

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