ST. LOUIS (AP by Jim Suhr)--Outdoor equipment maker K2 Inc. has completed its acquisition of Rawlings Sporting Goods Co. for about $71 million in stock, adding a storied name in baseball gloves and bats to its array of products for skiing, fishing, skating and biking.
Rawlings, a 116-year-old company based in the St. Louis suburb of Fenton, becomes a unit of Los Angeles-based K2 under the deal approved Wednesday by shareholders of both companies.
"Obviously, we couldn't be happier. We think it's a tremendous fit,'' Dick Heckmann, K2's chairman and chief executive, said in a telephone interview Wednesday after the deal was completed.
He said the combined company becomes formidable "in the highly fragmented sporting goods industry.'' Rawlings gives K2 a foothold in the $1.3 billion team sports equipment segment.
Steve O'Hara will remain the Rawlings unit's chief executive.
Wednesday's developments came just 13 days after K2 suggested it might abandon the deal, saying in a federal regulatory filing that the acquisition could unravel unless K2 reached agreements to retain certain Rawlings' contracts with key business partners.
In recent days, K2 said it had reached accords with all of Rawlings' commercial customers, including Major League Baseball, which has been supplied with Rawlings' baseballs since 1977. Rawlings said Wednesday the new six-year deal with big-league baseball runs through 2008, and that Rawlings may use the MLB logo for its baseballs and batting helmets.
More than half of all major-league baseball players use a Rawlings glove, including stars Derek Jeter, Alex Rodriquez, Ken Griffey Jr. and Pedro Martinez, K2 said. And more than one-third of the players use a Rawlings bat.
Under terms of the deal, Rawlings shareholders get 1.08 shares of K2 stock for each Rawlings share. When first announced in December, each Rawlings share would have been converted into 0.95 shares of K2 stock.
At Wednesday's closing prices, that gave Rawlings shareholders stock worth $8.73 for each Rawlings share. Rawlings had about 8.1 million shares outstanding.
The deal also weathered other bumps along the way. Michigan businessman Daniel Gilbert lost a bidding war for Rawlings and shed much of his Rawlings stake earlier this month, reducing his stake in Rawlings from nearly 15 percent to just 3.3 percent, according to his filing with the Securities and Exchange Commission.
Gilbert, an executive with online mortgage lender Quicken Loans, had offered to acquire Rawlings for $8 per share in cash, then later sweetened his bid to $8.50 per share.
But Rawlings accepted a rival offer from K2.
Gilbert initially vowed to challenge K2's proposed acquisition, saying it contained "tons of inherent risks'' for Rawlings' shareholders and that he failed to see the "synergy between a ski-and-fishing-pole company and a baseball one.''
But Gilbert later relented, saying he had become comfortable with K2's vision for Rawlings.
In trading on the New York Stock Exchange, K2 shares fell 9 cents to close Thursday at $7.99.
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