Clarus Corporation announced it has entered into a definitive agreement to acquire Australia-based Rhino-Rack Pty Ltd, a manufacturer and distributor of automotive roof racks, trays, mounting systems, luggage boxes, carriers, and accessories, for an aggregate purchase price of U.S.$198 million.
Rhino-Rack will continue to operate independently as a wholly-owned indirect subsidiary of Clarus and will constitute a third reporting segment associated with mobile solutions for outdoor adventure.
The purchase consideration is comprised of $150 million cash and approximately 2.3 million shares of Clarus common stock calculated pursuant to the terms of the purchase agreement.
Richard Cropley, Rhino-Rack’s founder and managing director, is anticipated to be a top-five shareholder of Clarus following the completion of the transaction. In addition, an earn-out of $8 million in cash is payable on July 31, 2022, contingent on the achievement of a specified revenue target. The company expects the cash consideration to be financed through the upsizing of the company’s existing credit facility led by J.P. Morgan. The acquisition of Rhino-Rack is expected to be immediately accretive to Clarus following closing.
For the trailing twelve-month period ended March 31, 2021, Rhino-Rack generated approximately $90 million in net sales and approximately $16.7 million of Adjusted EBITDA. Approximately 80 percent of Rhino-Rack’s sales came from Australia and New Zealand, and 20 percent from North America.
John Walbrecht, president of Clarus, said, “Rhino-Rack is truly a unique brand and one that we view as perfectly aligning with our Super Fan brand acquisition strategy. Since its founding, Richard has built a durable business with leading brand and market positions, a customer-centric focus and an affinity for protecting and funding an important cause related to rhinoceros conservation. Immediately following the closing of the transaction, we intend to expand Rhino-Rack’s product penetration in North America, organically grow in its core Australia and New Zealand markets and capitalize on our existing network of key distributors and dealers to develop sales in the rest of the world. We are excited to welcome the entire Rhino-Rack team to Clarus as we continue our shared vision of providing consumers with the best-engineered products designed to get them from their homes to their adventures.”
The transaction is expected to close in July 2021, subject to customary closing conditions and certain regulatory approvals in New Zealand. Following the closing of the transaction, the Rhino-Rack management team will continue to run the business from Rhino-Rack’s headquarters in Sydney, Australia.
Clarus expects to provide additional information on the Rhino-Rack transaction in connection with its second-quarter conference call expected to be held in August 2021.
Stifel served as financial advisor to Clarus and Baker McKenzie in Australia served as legal advisor to Clarus. Deloitte Corporate Finance in Australia served as financial advisor to Rhino-Rack and Ash Street Partners served as legal advisor to Rhino-Rack.
Photo courtesy Rhino-Rack