Bear Stearns Reveals the Real Skinny on the CamelBak Deal
In a story first reported in SEWs sister publication, The B.O.S.S. Report last Monday, Bear Stearns Merchant Banking confirmed Thursday that they have purchased CamelBak Products, Inc. from Kransco Group owner John Bowes family in a $210 million all-cash deal brokered by J.P. Morgan Chase & Co.
BSMB is expected to make a $90 million equity investment in the deal, with the balance expected to be funded through a $80 million senior debt package with BNP Paribas SA and Bank of New York and $40 million in sub debt through American Capital Strategies.
As we reported in B.O.S.S. last week, the strategic buyers fell out early in the bidding process as the price tag got a little too rich, according to people close to the deal, and was narrowed down to around three or four institutional players over the last few months.
In a conversation with Bear Stearns senior managing director Rick Perkal, The B.O.S.S. Report learned that CamelBak management is going to stay in place and will gain some ownership equity in the company. “We think we have tremendous growth opportunities ahead for this company, which has one of the finest management teams around,” he said.
Bo Arlander, the other BSMB senior managing partner in the deal, indicated that the acquisition focused on the strength of the management team and bringing them in on the investment was important to the deal. “We usually dont invest in companies unless we feel the company has a strong management team,” said Arlander in an exclusive interview with B.O.S.S.
She went on to say that the other critical component to the deal such as CamelBaks “portfolio of patents” and their position in the market as an “aggressive innovator” made this an attractive deal. “The philosophy of the company is to continue to innovate”, she said.
B.O.S.S. has learned that the business has evolved a bit over the years, and “has shifted a little” from previous estimates of 60% retail and 40% military. BSMB said the two businesses are “similar in size now”.
Ms. Arlander, an avid triathlete who has competed in a number of Ironman triathlons, may have an opportunity at Alcatraz now that she is re-locating to San Francisco to “establish a Western front” and look at additional deals. BSMB has already indicated that operations for Camelbak will remain in Petaluma, CA.
CamelBak has been owned since 1995 by The Kransco Group, a San Francisco-based holding company controlled by John Bowes. According to a story in the San Francisco Chronicle, Kransco only ponied up about $4 million for CamelBak, which was named FasTrak Systems and based in Weatherford, TX at the time. Bowes moved the company to Petaluma to be closer to Kransco and higher caliber management talent.
Kransco sold Yakima Products to Watermark Paddlesports in August 2001 in a deal valued at roughly $91 million. J.P. Morgan also brokered that deal. Bowes bought Yakima, which was earning nearly $2 million on $20 million annual sales, for about $1 million in cash plus assumption of $15 million of debt. Bowes said they had more than doubled sales to $52 million and increased profits five-fold to around 19% of sales, according to the Chronicle piece.
The Camelbak deal was rumored to be worth somewhere between 6.5x and 8.2x CamelBak's annualized EBITDA.
B.O.S.S. discovered in talks with BSMB that the lower figure was “way too low” and the upper figure “a bit too high”, with Ms. Arlander saying that the 6.5x and 8.2x multiple “numbers are incorrect”.
The CamelBak acquisition is expected to close by the end of the month.
