Costa Mesa-based clothing maker Volcom Inc. is taking another step in its evolution by buying out a licensed seller of its products in Australia and taking over the business itself.
Volcom said Friday it is buying the remainder of Volcom Australia, a licensee that designs and sells clothes under the company’s name.
Volcom already owns 14% of Volcom Australia from prior investments.
Terms of the deal, expected to close in the third quarter, weren’t disclosed.
Mitch Kummetz of Milwaukee-based investment bank Robert W. Baird & Co. estimated the deal values Volcom Australia at $8 million.
Volcom Australia is estimated to have yearly sales of about $20 million, according to Kummetz. Volcom has projected 2010 sales of $320 million.
The move is part of a trend for Volcom, which makes clothes inspired by surfing, skateboarding, music and art.
In 2008, the company bought out the seller of its clothes in Japan.
In 2007, Volcom made its biggest global expansion by taking over sales of its clothes in Europe.
The moves echo those made by other clothing makers, particularly Huntington Beach-based Quiksilver Inc.
Early on, clothing companies turn to licensees for sales in other countries. The licensees typically work with the company on designs and pay royalties on sales of clothes.
That makes licensing a cost effective way to expand sales abroad for young companies.
As companies get bigger, it starts making more sense to take over global operations themselves.
Volcom typically sees a rise in costs related to taking over operations in other countries and a drop in licensing revenue.
But the deals presumably allow Volcom to keep more of the profits on sales of its clothes.
Company watchers expect more deals.
Volcom is said to be waiting for licensing deals in South Africa in 2011 and in Brazil in 2013 before taking over those markets itself.
