US branded clothes label giant VF and outdoor shoes and clothing company Timberland said today they would conduct a $2 billion merger to create a $10 billion clothes giant.

'This acquisition will continue the transformation of VF's portfolio, propelling VF's Outdoor & Action Sports businesses to 50% of total revenues,' the company's chief executive Eric Wiseman said.

The merger, approved by the boards of both companies, will be accomplished by VF buying out Timberland stock at $43 per share, and is expected to close in the third quarter.

VF, whose brands include include Wrangler, The North Face, Vans, JanSport and Eastpak, is targetting 10% annual sales growth for Timberland.

'This will be a winning combination, leveraging VF's international and direct-to-consumer platforms to drive growth in the Timberland and Smartwool brands globally,' Wiseman said.

'At the same time, VF will benefit from Timberland's rugged outdoor footwear expertise, international penetration in markets such as Japan, and leadership position in sustainability,' he added.

The merger should also help boost profitability by reducing sourcing costs,VF said.

Timberland should add about $700m to its 2011 sales and increase earning per share by $0.25 this year and $0.75 in 2012.