Deal to offer stability for new trans-Pacific conglomerate.
Australian skate-shoe giant Globe International announced in June that it acquired Kubic Marketing, the U.S. holding company whose properties include World Industries and Dwindle Distribution (Tensor Trucks, enjoi, Blind, Darkstar, and other brands). The deal adds one more division to the Globe group, which previously consisted of Globe International, Globe North America, and Globe Australasia. It also marks Globe’s entrance into skate hardgoods and snowboarding, and broadens its presence in action sports. “The acquisition will help the growth of all Kubic and Globe brands worldwide,” says Matt Hill, president of Globe North America. “Kubic will continue to operate as its own stand-alone entity with a great amount of synergy between Globe and Kubic.”
The 46-million-dollar deal buys out Kubic majority partners Swander Pace Capital and New York Life, while Kubic’s management team will roll their equity into Globe stock.
Kubic’s senior management will remain virtually unchanged, with Frank Messman continuing as president and CEO. World Industries and Dwindle have also recently consolidated their headquarters in El Segundo, California, although the companies will continue to be operated separately and with unique distribution programs.
Besides its financial resources, Globe brings years of footwear and softgoods experience to Kubic companies. Dwindle Distribution President Rob Valerio is pleased with the deal because he believes consolidation in the skateboard industry is inevitable, and Globe is the best match for Dwindle and World Industries. “I think all of the little brands are going to be squeezed out,” he says, adding that virtually nothing will change in the way Dwindle does business. “We’re not changing our distribution network. We’re not adding any brands. It’s a chance to grow with a company that understands what we’re doing.”
Valerio says that Kubic management went with the deal because they’re impressed by Globe founders Matt, Steve, and Peter Hill, who have built their company with careful regard to limited distribution and ‘core-brand management, particularly in light of the fact that Globe is a publicly traded company (GLB on the Australian Stock Exchange). “Sales are down for everyone right now,” says Valerio. “If you’re privately funded, you have a much harder time surviving a downturn.”
Kubic CEO Frank Messmann agrees that Globe is the best match for Kubic and feels the company is in a much better position with partners who really understand the action-sports business. Many key pros on Kubic brands also happen to ride for Globe Shoes, and the Hill brothers were pro skaters in the 80s, just as Kubic’s Rodney Mullen, Steve Rocco, and Messmann were. “We’ve been very close with the Hills for many years,” Messmann says. “They’ve been our (Australian) distributor for a long time, and our licensee for the World Industries brand in Australia and New Zealand. It’s just more fun. These are people we can bounce ideas off.”
To many in the U.S., the deal seems backward: in North America, Dwindle and World have a much larger presence than Globe. But like Kubic, Globe is a multi-brand business with distribution and licensing deals in Australia and New Zealand, plus many other proprietary brands in its stable that are more successful in markets outside the U.S. Globe’s public status, says Messmann, also allowed the company to raise the necessary capital virtually overnight. “To buy a company that’s half your size is a major decision,” he says. “It could only be done because the Australian markets are much more open to action-sports businesses than the U.S. The investment banker in New York isn’t going to understand the action-sports business as well as the average Australian investment banker because Australia is essentially a beach-sports and surf culture.”
World Industries President Bob Sayre says that the brand will continue to focus on ‘core-retail accounts, refuting a Los Angeles Times story that suggested World might expand distribution to major department stores in order to reach its younger customers. “Some people may disagree in terms of where World distribution already is,” Sayre says. “But we’re really trying to manage the ability of the brand to be available to the customer. We just have to be very careful.
“The Hills are really sensitive to ‘core-shop distribution and the image of the brands. They’re a really good fit because we all want to see growth, but they’re gonna want to make sure we manage it (growth) well.”