Clarus Corp. completed the acquisition of Australia-based Rhino-Rack Pty Ltd. The company also amended and upsized its existing senior credit line.
Clarus’ portfolio of brands also includes Black Diamond, Sierra, Barnes, Pieps, and, SkinNourishment.
Rhino-Rack will continue to operate independently as a wholly-owned subsidiary of Clarus and constitute a third reporting segment.
Clarus acquired Rhino-Rack for $AUD 194 million (approximately $USD 145 million) in cash, subject to a post-closing working capital adjustment, and approximately 2.3 million shares of Clarus common stock for a total aggregate purchase price of $AUD 273 million or approximately $USD 207 million based upon the AUD/USD exchange rate and market value of the stock price at closing. In addition, an earn-out of $AUD 10 million (approximately $USD 8 million) in cash is payable on July 31, 2022, contingent on reaching a specified revenue target. With the closing, Richard Cropley, Rhino-Rack’s founder and managing director, is now a top-five shareholder of Clarus.
Rhino-Rack reported $AUD 115 million (approximately $USD 90 million) in sales for the trailing twelve months ended March 31, 2021. The acquisition is immediately accretive to Clarus’ earnings.
“Closing the Rhino-Rack acquisition is a major addition to our portfolio of super-fan brands,” said John Walbrecht, Clarus’ president. “Rhino-Rack is an iconic brand that we believe has a massive runway for potential growth. We look forward to seeking to accelerate the brand’s penetration in North America while continuing to grow organically in the company’s existing core markets of Australia and New Zealand. We are already busy at work deploying our ‘innovate and accelerate’ playbook to expand the brand through product innovation, operational excellence and a clear go-to-market strategy. We are thrilled to partner with the team at Rhino-Rack and continue their legacy of providing outdoor enthusiast customers with engineered products of superior design.”
Warren Kanders, the executive chairman, Clarus, added, “We are excited about completing the transaction with the Rhino-Rack team. The company’s strong profitability and cash flow profile are expected to further strengthen our balance sheet capacity as we continue to evaluate new M&A and organic growth opportunities.”
Clarus anticipates updating its financial outlook on its upcoming second-quarter earnings call in August.
The amended and upsized existing senior credit facility was led by J.P. Morgan Chase Bank, N.A., with the U.S. Bank National Association, Regions Bank, Bank of America, N.A, and Zions Bank participating in the lender group.
Under the terms of the upsized agreement, Clarus has access to an increased revolving credit facility of $100 million and an increased $125 million term loan. The facility also includes an uncommitted accordion feature of $50 million, for a total borrowing capacity of up to $275 million. The facility bears interest at either an adjusted LIBOR rate or an alternative base rate, plus an applicable margin ranging from 1.50 percent to 2.625 percent per annum and matures on May 3, 2024.
“The upsizing of our credit facility provides us with increased flexibility and capacity as we close on our recently announced acquisition of Rhino-Rack,” said Clarus CFO Aaron Kuehne. “We will use the upsized facility to finance the transaction’s cash consideration, which further supports our strategic and disciplined capital allocation strategies. With this facility in place, we believe we are well-positioned to close the Rhino-Rack acquisition and the deployment of our ‘innovate and accelerate’ strategy to maximize the iconic brand’s growth potential. We look forward to adding Rhino-Rack to our portfolio of ‘super-fan’ brands and seeking to build upon the sustained momentum that we have seen this year across our brands.”
The facility continues to be secured generally by substantially all assets of the loan parties, and each loan party has guaranteed the obligations of each other loan party.
Photo courtesy Rhino-Rack
