Helly Hansen is to be acquired by Canadian Tire Corporation (CTC), one of its largest retail partners, in a deal valuing the Norwegian outdoor, skiing and sailing brand at nearly one billion Canadian dollars.

The agreement for the acquisition comes less than six years after Helly Hansen was taken over by the Ontario Teachers' Pension Plan (OTPP) for an undisclosed sum. In the interval, the Oslo-based company has sharply raised its performance, with a stronger focus on a smaller number of countries and categories, but the price agreed for the takeover indicates that CTC is upbeat about the potential for further development and synergies.

Helly Hansen's sales moved up by 18 percent to 2.9 billion Norwegian kroner (€302.3m-$356.1m) in 2017. As detailed further, this included some one-off sales and the organic increase amounted to 14 percent. The business yielded an operational Ebitda of NOK 255 million (€26.6m-$31.3m), up by 25 percent for the year.

CTC has agreed to purchase Helly Hansen for C$985 million (€652.2m-$768.5m) and to assume about C$50 million of operating debt net of cash. The acquisition is anticipated to close in the third quarter, subject to usual closing conditions.

The buyer said that Helly Hansen would remain in Oslo under the management team led by Paul Stoneham, who has been the company's chief executive since 2015. He will report to Mahes Wickramasinghe, CTC's executive vice president. Stoneham became chief executive after the takeover by OTPP. It previously belonged to Altor Equity Partners, a Nordic investment firm, which sold its stake at an undisclosed price.

Steven Wetmore, CTC's chief executive, said in a conference call with investors last week that Helly Hansen would help the Canadian company to expand its branded business, with resources in international markets, in wholesale and account management, in design and sourcing as well as brand management. CTC could take advantage of these assets for its private labels and acquired brands such as Outbound, Sherwood and Golfgreen.

The other way around, Helly Hansen could benefit from the CTC group's financial strength along with other resources, such as its hardware design and sourcing capabilities, digital and retail analytics, and the ability to manage multiple brands.

CTC's retail business is led by Canadian Tire, which covers categories from sports to gardening and household appliances. The group's sports-related retail brands include Hockey Life and FGL - itself a group including Sport Check, Hockey Experts, Sports Experts, National Sports, Atmosphere and Intersport. CTC encompasses about 1,700 retail and gasoline outlets, along with financial services, which generated sales of C$13.4 billion (€8.9bn-$19.5bn) and net income of C$735 million last year.

CTC said the deal was immediately accretive to its business in terms of Ebitda, cash flow and earnings per share, before the realization of synergies.

The agreement comes three years into the strategic changes launched by Stoneham. The product range was streamlined with a sharper focus on sailing, skiing, mountain, urban, rainwear and workwear products. The organization was adjusted as well, with several changes in management and a more consumer-driven approach. Helly Hansen boasted that it delivered compound annual growth rates of 12 percent in sales and 36 percent in Ebitda in the last three years. The Norwegian group added that its orders are up by 15 percent compared with the previous year, led by the European and U.S. markets.

Helly Hansen's turnover last year was pushed up by NOK 0.2 billion (€20.8m-$24.6m) from the sale of its Japanese brand rights in 2016, and on a smaller scale by the acquisition of the Musto brand for NOK 258 million (€26.9m-$31.7m) in October. Helly Hansen's organic sales increase reached 14 percent for the year, while it completed the reduction of its product range by about 25 percent during the first half.

The business yielded a gross profit margin of 45.6 percent, up by 2.7 percent, after the group cut its range and started to take care of its own sourcing in the middle of last year, instead of entrusting it to agents. Helly Hansen's 25 percent rise in Ebitda was achieved as the Norwegian group continued to cut costs while investing in the brand.

Musto, the British sailing brand that was acquired by Helly Hansen last October, pushed sales up by NOK 58 million (€6.0m-$7.1m) between the buy and the end of the year, but it suffered an operating loss of NOK 6 million. Helly Hansen has started integrating the two companies as it prepares to expand Musto's international business. The Norwegian group bought Musto from Phoenix Equity Partners.

CTC detailed the potential benefits of the acquisition in a presentation last week, showing that Canada is already Helly Hansen's second-largest market, behind Norway and ahead of the U.K., the U.S. and Sweden.

CTC's agreement to buy Helly Hansen was announced as the Canadian company reported a dip in profit for the first quarter, which contracted from C$87.5 million to C$78 million (€51.6m-$60.9m), after a one-off accelerated depreciation charge. The group's sales amplified to C$2.81 billion (€1.86bn-$2.19bn) for the three months, up from C$2.72 billion. Its comparable store sales were up by 5.2 percent, including increases of 5.8 percent for Canadian Tire and 3.9 percent for FGL.