Vista Outdoor Inc. entered into a definitive agreement to acquire CamelBak Products LLC from Compass Diversified Holdings Inc. just days after announcing it paid $40 million cash to buy Jimmy Styks, a maker of stand up paddle boards.
CamelBak provides personal hydration solutions for outdoor, recreation and military use. Its products include hydration packs, reusable bottles and individual purification and filtration systems.
The CamelBak acquisition will strengthen and expand Vista Outdoor's presence in outdoor sports and recreation, with products that complement every outdoor activity where Vista Outdoor's products are used. The transaction is subject to regulatory approvals and customary closing conditions. Vista Outdoor anticipates closing the transaction within the next month.
“The acquisition of CamelBak greatly advances Vista Outdoor's strategy to grow and strengthen our leading position in the outdoor recreation industry,” said Mark DeYoung, Vista Outdoor chairman and CEO “CamelBak fortifies our presence in the mainstream individual outdoor recreation market, creating an opportunity to increase the scale, reach and growth of several current offerings through an expanded global sourcing capability and a broadened retail distribution network. With limited overlap between our key customers, this acquisition creates significant cross-selling opportunities, increased channel presence and access into expanded domestic and international markets. As a market leader and preferred partner, Vista Outdoor can leverage the technical expertise of CamelBak to deliver innovative solutions and quality product offerings that will create value for our shareholders and customers.”
Under the terms of the transaction, Vista Outdoor will purchase CamelBak for $412.5 million, subject to a customary working capital adjustment, utilizing cash on hand and borrowings under its existing credit facilities. Management expects calendar year 2015 net sales for CamelBak of approximately $160 million. The purchase price includes an approximate net present value of $35 million in future tax benefits associated with the deductibility of intangibles from a prior acquisition of CamelBak.
The purchase price, net of the previously mentioned tax asset, represents a resulting effective multiple of approximately 11x CamelBak's expected calendar year 2015 EBITDA. Vista Outdoor intends to refinance the expected borrowings under its credit facilities with long-term debt financing. Pending such financing, Vista Outdoor has received a commitment to provide $50 million of secured debt financing from Morgan Stanley, which the company does not at this time intend to draw upon, but which provides additional flexibility pending completion of long-term financing. Absent transaction and transition costs, Vista Outdoor expects the acquisition to be accretive to Fiscal Year 2016 (FY16) earnings per share (EPS). Vista Outdoor will provide information relating to CamelBak's impact on FY16 financial results as part of its first quarter earnings press release and webcast on August 13, 2015.
CamelBak President and CEO Sally McCoy thanked Compass Diversified Holdings Inc. (CODI) for its support over the past nearly five years and said she is is looking forward to working with Vista Outdoor to build the CamelBak brand globally.
“CODI's support of our people and culture was a key ingredient to
successfully building our business and brand,” she said. “In addition, CODI
recognized the strong demand for our innovative, world class personal
hydration products, and through our successful partnership CamelBak's
business achieved new heights. We appreciate CODI's support and
guidance while ensuring that CamelBak's future outlook and positive
momentum are secure with Vista Outdoor. Vista Outdoor supports our mission to continue to reinvent the way people hydrate and perform through innovative hydration products.”
Founded in 1989 and headquartered in Petaluma, CA, CamelBak is the category creator for hands-free hydration and meets the needs of diverse consumers with a comprehensive product portfolio. CamelBak has an expansive network of marquee customers ranging from REI to Target. CamelBak has approximately 300 employees and will be integrated into the Outdoor Products segment of Vista Outdoor, increasing the scale of the business and reinforcing a culture focused on delivering high-quality, technologically advanced products.
Compass Diversified Holdings (CODI), which acquired CamelBak Aug. 24, 2011, expects to receive between $355 million and $375 million of total proceeds from the sale at closing after the allocation of the sales price to non-controlling equityholders and the payment of transaction expenses. The sum covers CODI's outstanding loans to and equity interests in CamelBak, which CODI acquired Aug. 24, 2011. The proceeds will be used to repay all outstanding debt under the company's revolving credit facility, with the balance increasing cash on the Company's balance sheet. The Company anticipates recording a gain on the sale of CamelBak ranging between $140 million and $160 million during the quarter ended September 30, 2015.
“Over the past four years, we have enjoyed working closely with CamelBak's management team, led by its CEO, Sally McCoy, and are proud of our accomplishments together.,” noted CODI CEO Alan Offenberg. “CODI's strategic investments enabled CamelBak to increase consumer penetration levels, build cash flows and generate greater organic growth.
Morgan Stanley serves as transaction and financial advisor and Cravath, Swaine & Moore LLP serves as legal advisor to Vista Outdoor in connection with the transaction.
Vista Outdoor is a leading global designer, manufacturer and marketer in the growing outdoor sports and recreation markets. The company operates in two segments, Shooting Sports and Outdoor Products, and has more than 30 well-recognized brands that provide consumers with a range of performance-driven, high-quality and innovative products in the ammunition, firearms and outdoor accessories categories. Vista Outdoor is headquartered in UT, and has manufacturing operations and facilities in 10 U.S. States, Puerto Rico, Mexico and Canada along with international sales and sourcing operations in Canada, Europe, Australia, New Zealand and Asia.
