Carlsbad's K2: Sporting kingdom expands reign

CARLSBAD -- K2 Inc. announced Wednesday that it is being sold for $1.2 billion in cash, stock and assumed debt to Jarden Corp. of Rye, N.Y.

Both companies make familiar consumer products. K2 brands include Rawlings baseballs and a plethora of other outdoor sports equipment. Jarden brands include Sunbeam appliances, Bicycle playing cards, Mr. Coffee, Coleman camping gear and Pure Fishing sportfishing supplies.

Jarden will pay $10.85 per share of K2 common stock in cash, and issue 0.1086 share of Jarden common stock for each share of K2 common stock as of the deal's close. The price can be adjusted under the agreement before it closes.

K2 also announced that it earned $7.1 million, or 14 cents per share, for the quarter ended March 31. In the same quarter of last year, the company earned $5 million, or 10 cents per share.

Shares of K2, one of North County's most highly valued companies, were up 20 percent at the close of Wednesday trading, at $15.10 per share. That gives the company a total stock value of $746 million.

Besides Rawlings, K2's product line includes K2 skis, snowboards and apparel; Shakespeare fishing tackle; and Brass Eagle paintball equipment.

The purchase is expected to close early in the third quarter of this year, the companies said. The boards of both companies have unanimously approved the deal, which is subject to shareholder and various regulatory approvals.

K2 is a holding company, which means that its main assets are its subsidiary companies. Only about 275 of its estimated 5,000 employees work in San Diego County. Most of those local employees are in Carlsbad, its administrative headquarters. The rest are at the subsidiaries in various parts of the country, making, marketing and selling their products.

San Diego County's K2 payroll is probably going to remain about the same, said Dudley Mendenhall, K2's chief financial officer. Jarden is a growth-oriented company, like K2, Mendenhall said.

Jarden's product line doesn't overlap with K2, Martin E. Franklin, Jarden's chief executive, said in a conference call Wednesday morning.

"There's really no downside from a customer perspective because we're not cannibalizing any of our businesses," Franklin said in the conference call.

K2's executive chairman of the board, Richard J. Heckmann, was equally positive.

"I will say as the K2 management team if we were to pick two businesses that we thought would be perfect fits for us in the retail channel and give us the kind of leverage we'd want to have, they were Coleman and Pure Fishing. And we tried to buy 'em both, and just didn't have the capital structure to do it.

"Retailers want bigger, stronger, fewer vendors," Heckmann said.

The deal is aimed at boosting Jarden's profitable outdoor division, which includes sleeping bags, backpacks and tents. Earlier this month, Jarden bought Pure Fishing Inc. in a cash-and-stock deal valued by analysts at $390 million to $400 million.

The deal is expected to save Jarden between $25 million and $50 million, Franklin said during the conference call with investors.

Franklin said that the company also would announce a 3-for-2 stock split after the K2 acquisition closes.

- Material from wire services was used in this story.

- Contact staff writer Bradley J. Fikes at (760) 739-6641 or bfikes@nctimes.com. Comment at nctimes.com.