Publicly traded Compass Group Diversified Holdings LLC said it acquired Fox Factory Inc., which makes the well-known Fox brand of mountain biking shocks and other suspension systems for the action sports market.
Founded in 1974 and headquartered in Watsonville, Calif., Fox is a designer, manufacturer and marketer of high-end suspension products for mountain bikes, all terrain vehicles, snowmobiles and other off-road vehicles. Fox both acts as a tier-one supplier to leading action sport original equipment manufacturers and provides aftermarket products to retailers and distributors. Fox's products are recognized as the industry's performance leaders by retailers and end-users alike.
Under the terms of the transaction, which closed Jan. 4., CODI's acquisition of Fox is based on a total enterprise value of $85.0 million, representing approximately 7.5 times Fox's estimated earnings before interest, taxes, depreciation and amortization (“EBITDA”) for 2007, not including the “positive cash flow impact of the tax asset step-up pursuant to which CODI will be acquiring Fox.” Fox management will invest in the transaction alongside CODI resulting in an initial minority ownership of approximately 24%.
“This company possesses the critical characteristics we look for in all of our businesses, including market leadership in a niche industry, strong cash flow and proven management,” said I. Joseph Massoud, CODI's CEO. “The Fox brand name is highly recognized and well respected globally in its industry, and Fox's products reflect the company's culture of continual design innovation and superior performance. Robert Fox and the company's senior management team, who will continue to manage the business under our ownership, have driven growth by providing innovative suspension products for over three decades and we look forward to working with them to continue and accelerate this growth.”
Upon closing, this acquisition will be accretive to our shareholders and increase our cash flow available for distribution. Our ability to consummate this transaction was facilitated to a great extent by our financing structure, under which we will fund this acquisition through excess cash on hand and our newly expanded credit facility at the CODI level,” concluded Mr. Massoud.
