Quiksilver Inc. has closed the sale of its struggling Rossignol unit for $50 million, or about 40% of what it had hoped to get in August and a fraction of the $560 million it paid for the French ski maker in 2005.
The company sold the business to a former Rossignol executive, Australia’s Macquarie Group Ltd. and Jarden Corp., a Rye, N.Y., maker of outdoor products.
The sale was made up of $38 million in cash and $12 million in debt. Quiksilver plans to use the proceeds to pay down debt.
That the sale closed at all was a relief to investors and analysts, who have pushed for Quiksilver to unload the businesses.
“In this time of unprecedented challenge in the global credit markets, price concessions were required to achieve a final sale of Rossignol,” Chief Executive Bob McKnight said last month.
The company now is focusing on its mainstay business of clothes inspired by surfing, skateboarding and snowboarding.
Quiksilver bought Rossignol with high hopes of boosting winter sales to build on its clothing business, which typically is strongest in spring and summer.
The largest maker of surf-inspired clothes, Quiksilver was looking to take a page from Nike Inc., which grew from shoes and clothes into a maker of a vast amount of sports equipment as well.
But Rossignol, which was losing money and market share when Quiksilver bought it, proved to be a constant drag on the company’s profits.
The sale calls for Quiksilver to keep selling Rossignol clothes through winter, which should bring in $6.5 million to $13 million in additional sales.
Quiksilver has yearly sales of $2 billion.
The company could continue to license the Rossignol name for clothes beyond winter.
It didn’t provide an update on ongoing plans to raise money. Quiksilver has hired Morgan Stanley as an adviser to possibly sell shares to investors or in a private equity investment.
Quiksilver said it has $100 million in cash and equivalents after the close of the Rossignol sale.
The company had about $745 million in long-term debt as of July 31.
Like other clothing makers and retailers, Quiksilver faces one of the worst downturns in clothing sales in recent memory.
The company’s shares closed up 20% Thursday on a market value of $240 million. The shares are off about 80% for the year.
