Investopedia: Wooly And T-Dawg Go Gucci

Somehow it just does not seem too likely that Gucci's core customer base overlaps much with folks who call themselves "Wooly" and "T-Dawg", but France's PPR, which owns the esteemed Gucci label, is going to give it a go anyway. On Monday morning, the French holding company  announced that it would be acquiring U.S. boardwear apparel maker Volcom (Nasdaq:VLCM), which was founded by the aforementioned Wooly and T-Dawg in 1991. (For background reading, see Using Consumer Spending As A Market Indicator.)

The Terms of the Deal 
PPR is paying almost $608 million for the smaller clothing company, giving Volcom shareholders $24.50 a share in cash, or a 24% premium to Friday's close. That puts a valuation on Volcom shares of about 1.5x trailing sales and about 10.5x trailing EBITDA - not exactly premium pricing for a once-hot stock.

Still, it is difficult to value a company like Volcom on a relative basis. Billabong is publicly listed in Australia and trades at an even lower valuation, Quicksilver (NYSE:ZQK) is struggling, and other once-popular boardwear companies like Vans and Ocean Pacific faded years ago and were acquired by the likes of VF Corp (NYSE:VFC) and Iconix (Nasdaq:ICON).

Read the full piece here:
http://stocks.investopedia.com/stock-analysis/2011/Wooly-And-T-Dawg-Go-Gucci-VLCM-ZQK-ICON-VFC-NKE-LULU-UA0502.aspx