Ending weeks of industry speculation Billabong International Limited today announced it has reached a conditional agreement to acquire RVCA. Based in California, RVCA was founded in 2000 by Pat Tenore. Today’s official ASX announcement has put an end to the speculation and caps a string of announcements by Billabong in recent times. Chief executive officer Derek O’Neill said RVCA was one of southern California’s most exciting emerging brands. RVCA picked up the SIMA Image Award for Men's Brand of the Year in 2009 and is reported to have revenues around US$50 million.

“RVCA is not defined by any single sport or culture. It represents a community of culturally aware youth and is inspired by a diverse range of interests, each of which is underpinned by an original, highly creative design element,” said Mr. O’Neill. “It is a brand that has developed a very strong presence in the United States, particularly in southern California, on the strength of its fashion-forward ranges in categories including art-driven t-shirts, denim, wovens, boardshorts and, more recently, its girls’ line.”

The bulk of RVCA’s revenue is currently generated in the US, while its expansion into other key markets including Australia and Europe are in its infancy. Brand founder Pat Tenore said he and his existing management team would continue to drive the development and growth of the brand. Former WCT surfer Nathan ‘Noodles’ Webster runs RVCA in Australia.

Billabong North America President Paul Naude said the acquisition signalled an exciting time in the evolution of RVCA and would afford the brand more creative freedom.

“RVCA has done an incredible job to date in terms of building its brand, differentiating its product and supporting various subcultures through its Artist Network Program, its athletes and its advocates,” said Mr Naude.

“There comes a time in the development of a young brand when the administrative side of doing business can start to consume resources that are better applied to the creative development of the brand,” said Mr Naude.

“I think this is one of the strengths of the Billabong group. We have capabilities in areas including sourcing and the management of the supply chain, distribution and general financing and these types of support structures allow our brands to focus on product and marketing.”

Brand founder Pat Tenore said he was looking forward to working with Billabong.

“The original concept of RVCA was, and still is, to be a lifestyle brand that integrated different subcultures within one platform … a platform for likeminded people to produce great art and other creative endeavours, while getting recognition for their contribution and involvement,” said Mr Tenore.

“RVCA will be able to take this concept even further and provide a more extensive support base for the artists, athletes and advocates we work with.

“One of the key things about Billabong is its respect for the creative independence of each of its brands and that level of flexibility will allow RVCA to maintain its identity while benefiting from the support of the wider Billabong group.”

It is anticipated RVCA will contribute approximately 2% of Billabong group revenue and will be EPS neutral in the 2010-11 financial year. The purchase price, which is not considered material, remains undisclosed. The asset acquisition agreement is subject to usual conditions precedent. Billabong and RVCA anticipate the conditions will be satisfied shortly.