Editor’s note: For detailed analysis, click here to read Behind The Deal: How Callaway Aced The Jack Wolfskin Acquisition
Callaway Golf Company announced that it has completed the previously announced acquisition of Jack Wolfskin for €418 million, or approximately $476 million assuming a 1.140 Euro to US Dollar conversion rate, subject to a working capital adjustment.
Jack Wolfskin is an international, premium outdoor apparel, footwear and equipment brand. The company designs premium products targeted at the active outdoor and urban outdoor customer categories. The acquisition furthers Callaway’s push into the active lifestyle category after its successful 2017 acquisitions of TravisMathew and Ogio. Post-acquisition, Jack Wolfskin will continue to operate out of its Idstein, Germany headquarters.
“We are very excited to have completed this acquisition and have the Jack Wolfskin brand as part of the Callaway portfolio,” commented Chip Brewer, President and Chief Executive Officer of Callaway. “We believe Jack Wolfskin fits extremely well with our current brands and furthers our stated plan of strategic investments in complementary areas. Jack Wolfskin provides an innovative product offering with long-term synergies to the existing soft goods portfolio. We look forward to partnering with the Jack Wolfskin management team to maximize this brand’s growth potential.”
“We are thrilled to be joining Callaway’s growing portfolio of premium, active lifestyle brands,” said Jack Wolfskin’s Chief Executive Officer Melody Harris-Jensbach. “The Callaway team has proven over many years that they are great innovators and brand builders. We are excited to have them invest in our brand and are eager to start working with them.”
Callaway financed the transaction with a $480 million Term Loan B facility, which was led by BofA Merrill Lynch and JP Morgan Securities LLC. The facility has a seven-year term, subject to certain prepayment rights, and bears interest at a rate of LIBOR plus 4.50 percent. The Term Loan B market weakened during the period the Company marketed the loan to investors and therefore the estimated annual financing costs will be approximately $0.05 per share higher than previously estimated. As a result, Callaway currently estimates that this transaction is expected to be approximately $0.11 per share dilutive for full year 2019 and slightly accretive in 2020, both on a non-GAAP basis, which excludes non-recurring transaction costs and non-cash purchase accounting adjustments. The Company intends to provide further guidance on a GAAP basis once it has completed its purchase accounting adjustments. Full year 2019 adjusted EBITDA, which excludes transaction costs and non-cash purchase accounting adjustments, is still estimated to be approximately $33 million for the Jack Wolfskin business. The Company remains excited about adding this premium brand to its portfolio and the strategic benefits and long-term potential this acquisition provides.
Latham & Watkins LLP acted as legal counsel to Callaway for the acquisition and Gibson Dunn & Crutcher acted as legal counsel to Callaway for the Term Loan B facility. JP Morgan Securities LLC acted as exclusive financial advisor to Callaway for the acquisition. Kirkland & Ellis International LLP acted as legal counsel and Houlihan Lokey as exclusive financial advisor to Outdoor Holdings SCA – the holding company of Jack Wolfskin. THM Partners acted as director of and advisor to the Jack Wolfskin Group.