Collegiate Pacific announced that it has executed a letter of intent to acquire Kesslers Team Sports of Richmond, IN., the nation's largest independent team sporting goods distributor with annual revenues exceeding $30 million. Kesslers is recognized as the #1 team distributor in the USA for some of the highest profile team uniform brands in the World. Terms of the transaction were not disclosed. Closing is expected to occur in early 2004 and is conditioned on the completion of customary due diligence and the execution of a mutually acceptable definitive agreement.
In discussing the proposed acquisition, Michael Blumenfeld, CEO of Collegiate Pacific, stated: “The combination of these two dynamic corporations will form a company that we believe will revolutionize the sporting goods industry. This proposed combination marks the first time in the sporting goods industry that brand name team uniforms; proprietary equipment and a field sales force will be consolidated under one roof. The relationship redefines, we believe, what it means to be vertical in this marketplace.
“Collegiate Pacific is a designer, manufacturer and distributor of thousands of sports products while Kesslers is a rapidly expanding marketing and sales company with 8 regional offices and 65 field sales professionals.
Kesslers' profitability, which is already above industry standards, would be expected to expand dramatically with the infusion of new Collegiate Pacific proprietary products — expanding Kesslers' gross margins and sales potential. Collegiate Pacific's profitability would be further enhanced by the expected increased sales of its high margin, manufactured products through Kesslers' existing and expanding sales force. Both companies derive the majority of their revenues from the youth and varsity school and team sport markets.
“The combined entity will enable the Kessler sales force to provide a one stop equipment and team uniform service to thousands of existing and potential Kessler customers. We believe this will allow for an unprecedented expansion of the Kessler Team Sports operations.
“We continue to evaluate other potential acquisitions and strategic affiliations to compliment the rapid growth we envision for this new business combination. Targets will include wholesale team dealers with active sales forces; manufacturers and distributors of institutional sports products; and competitors in our own niche within the sporting goods industry.
“Of equal importance in this transaction is the professional managerial strength that would be added in the proposed combination. Bob, Dan and Phil Dickman, the owners and officers of Kessler Team Sports, have a cumulative work span of over 40 years in the sporting goods industry. All three will continue in their existing positions and will offer a welcomed layer of senior management to support our mutual growth in revenues and profitability.
“We believe that our annualized, consolidated revenues, subsequent to the successful closure of Tomark and Kesslers, would approach $70 million and that the first full-year cycle of ownership would produce a projected eightfold increase in operating income as compared to the recently reported FY2003 period, which ended on June 30, 2003.”
