VF Corp , owner of the North Face clothing brand and chain, is buying footwear maker Timberland Co for $2 billion to boost sales of outdoor gear, its biggest business.

The deal will help VF build the premier portfolio of outdoor brands, Chief Executive Eric Wiseman told investors on Monday on a conference call, noting that Timberland was at the top of a shortlist of targets VF drew up a year ago.

The deal values Timberland at $43 a share, a 43 percent premium to its closing price of $29.99 on Friday on the New York Stock Exchange.

Outdoor clothing, such as fleece vests and hiking pants, was VF's fastest growing segment last quarter, with sales up 16 percent. The Timberland deal will complement that by vastly beefing up VF's offerings of items such as hiking boots and sandals. Footwear accounts for 75 percent of Timberland sales.

VF's brands and store chains run the gamut from high-end lines such as John Varvatos and 7 For All Mankind to moderately priced lines such as Lee and Wrangler jeans.

But outdoor gear is at the heart of the company's growth strategy. Earlier this spring, Wiseman said he wanted outdoor gear to surpass 50 percent of sales by 2015. On Monday, he raised that threshold to 60 percent.

Wiseman said the deal will give VF earnings an immediate lift. He expects the deal, approved unanimously by the boards of both companies, to boost earnings per share by 25 cents in 2011 and by 75 cents in 2012, including deal-related expenses.

Timberland will add $2 to annual earnings per share by 2015, and add about $700 million to VF's 2011 revenue.

The companies expect the deal to close in the third quarter.

VF shares rose 10.8 percent to $101.72 in morning trading, while Timberland shares were up 42.5 percent to $42.75.

HELPING TIMBERLAND MARGINS

Stratham, New Hampshire-based Timberland, with its namesake label and brands such as Mountain Athletics and SmartWool, expects 2011 revenue of $1.6 billion, more than half of it generated internationally.

Before the deal was announced, Timberland shares had plummeted 34 percent since a 12-month high of $45.50 in early May, when its results fell well short of analyst forecasts amid fears that rising product and labor costs would continue to hit its margins this year.

The price is fair, Susquehanna analyst Christopher Svezia said. At first blush, it seems a bit expensive, but I think Timberland is definitely on the upswing in terms of their business.

Wiseman said VF's infrastructure overseas, where it gets 30 percent of its sales, would help lift Timberland's sales 10 percent annually.

But he warned investors to be patient while the deal takes hold, saying it would take five years for Timberland operating margins to match those of VF. VF is targeting a companywide operating margin of 15 percent by then.

VF plans to finance the acquisition through a combination of cash on hand, commercial paper and term debt.

Timberland can solicit higher bids until July 26. Timberland said in a regulatory filing it would pay VF a termination fee of $87.2 million fee if it opts for a better bid.

Law firm Ropes & Gray advised Timberland on the deal.

(Reporting by Dhanya Skariachan and Phil Wahba in New York, additional reporting by Viraj Nair in Bangalore; Editing by Lisa Von Ahn and John Wallace)