Compass Diversified Holdings (NYSE:CODI) closed on its acquisition of 5.11 Tactical under an agreement announced July 29.
The acquisition was completed for a purchase price of $400 million (excluding working capital and other customary adjustments) and funded through a draw on the CODI’s revolving credit facility as well as $250 million in additional term loan debt issued under the company’s existing credit facility in connection with the closing of the 5.11 acquisition. Acquisition related costs were $1.9 million.
As part of the transaction, CODI acquired a substantial tax asset, the positive effect of which will be meaningful for CODI’s annual cash flow. The acquisition of 5.11 is expected to provide 30 to 35 cents per share of cash flow accretion to CODI on an annualized basis.
CODI’s initial equity ownership in 5.11 as a result of this transaction is approximately 97.5 percet. 5.11’s management team invested alongside CODI and own the remaining 2.5 percent.
5.11 is a leading designer and marketer of purpose-built tactical apparel and gear serving a wide range of global customers including law enforcement, military special operations and firefighters, as well as outdoor enthusiasts. The company is headquartered in Irvine, CA and Modesto, CA, and operates international sales offices in Sweden, Mexico, Australia, China and UAE.
CODI owns and manages a diverse family of established North American middle market businesses, including Ergobaby, Liberty Safe and retains a 23 percent stake Fox Factory Holding Corp., which was spun off in an initial public offering in August 2013. FOX designs and manufactures high-performance suspension products primarily for mountain bikes, side-by-side vehicles, on-road and off-road vehicles and trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, and motorcycles.
