Kodiak Group Holdings Inc. yesterday signed a deal to acquire safety boot maker Terra Footwear -- a major step in its goal to become a global footwear powerhouse.
Citing competitive reasons, the two privately held Canadian companies would not reveal financial details for the merger. It is part of the continuing consolidation of the domestic footwear industry, which has been hurt by low-cost imports.
For Kodiak, a marketing company that imports its footwear from the Far East, the deal is a different twist on the merger trend. It is expected to strengthen the iconic Canadian brand known for its safety boots, because it will now be able to move some of its production back to Terra's two state-of-the-art manufacturing plants in Canada.
The purchase will also enable Kodiak to make a more aggressive push into the lucrative U.S. market, and boost its global presence though Terra's distribution network. Terra's safety boots and shoes are now sold in 23 countries. The acquisition of Terra also includes four Factory Footwear retail stores in Newfoundland.
"We are basically firing on all cylinders right now," Kevin Huckle, chief executive officer of Mississauga-based Kodiak, enthused in an interview. "We have two very strong brands that can compete on a world scale with a strong manufacturing sector as well as a continuing import sector."
The acquisition reverses a trend of production moving offshore to low-cost countries, because Kodiak will "repatriate" production of between 50,000 to 100,000 pairs of boots to Terra's plants during the first year, Mr. Huckle added.
Dan Aleven, former Terra president and now chief operating officer for Kodiak, said Terra was put up for sale last fall because his two sisters no longer wanted to be in the family business, but he hoped to take the company to the next level.
Terra, based in Markdale, Ont., was founded by Mr. Aleven's father in 1971 when he bought an abandoned shoe factory in Harbour Grace, Nfld. Today, Terra has about 300 employees at that plant and another in Markdale.
Kodiak's history dates back to 1912 when the Greb family of Kitchener, Ont., supplied boots to the Canadian Armed Forces, and then developed Canada's first waterproof boot in the 1950s that was marketed under the Kodiak brand.
The company changed hands several times until Mr. Huckle led a group that bought the Kodiak name and other inventory from bankrupt Greb International & Co. Ltd. in 2000, and then moved production offshore. The outsourcing is a very similar story to U.S. brands like Reebok and every other shoe maker in Canada, Mr. Huckle said.
Acquiring Terra's manufacturing capability enhances Kodiak's strategy, which so far has focused on marketing the Kodiak brand, opening 16 retail stores in Canada on its own or jointly with safety equipment supplier ISECO, and licensing the Kodiak name for items such as socks and backpacks.