The new company, which will include the Wrangler, Lee and Rock & Republic brands, and the VF Outlet business, will go public after market close on May 22 on the New York Stock Exchange (NYSE) under the stock symbol “KTB,” meaning its first day of trading will be May 23.
VF said Tuesday that the separation will be achieved through the distribution of 100 percent of the shares of Kontoor Brands to holders of VF common stock. VF shareholders entitled to receive the distribution will receive a book-entry account statement or a credit to their brokerage account reflecting their ownership of Kontoor Brands common stock.
VF shareholders will receive one share of Kontoor Brands common stock for every seven shares of VF common stock held at the close of business on the record date of May 10.
VF said it expects to receive an opinion from its tax advisors confirming the tax-free status of the spin-off to VF and its stockholders. VF also noted that a “when-issued” public trading market for Kontoor Brands’ common stock is planned to commence on or about May 9 under the symbol “KTB WI,” and will continue through the May 22 distribution date.
Starting around May 9 and through the distribution date, it is expected that there will be two ways to trade VF common stock–either with or without the distribution of Kontoor Brands’ common stock. VF shareholders who sell their shares of VF common stock in the “regular-way” market–the normal trading market on the NYSE under the symbol “VFC”–after the record date and on before the distribution date, will be selling their right to receive shares of Kontoor common stock in connection with the spin-off.
Kontoor Brands executives said in a presentation to investors last week that the new company is expected to maintain revenue of around $2.5 billion in 2019, followed by low single digit growth in 2020 and 2021. The outlook for Kontoor Brands’ first fiscal year, which ends Dec. 28, has adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) ranging between $340 million and $360 million, reflecting a mid-single-digit to low double-digit decline compared with full year 2018 adjusted EBITDA.
Kontoor Brands comes into the market with a vertically integrated supply chain producing or sourcing more than 170 million units in 2018, executives said, adding that it has “deep retail relationships across leading brick and mortar and e-commerce players” and a global footprint across 65 countries.
VF Corp., which will move its headquarters to Denver, will then include the Vans, The North Face and Timberland brands. Kontoor Brands will have its headquarters in Greensboro, N.C., where VF has long been based.