Collegiate Pacific has completed its acquisition of Dixie Sporting Goods of Richmond, Virginia. The purchase price was approximately $6 million, payable primarily in cash, and includes the potential for an earnout payment of up to an additional $1 million based on Dixie's future operating results. The Company financed the cash portion of the transaction from existing cash on hand. The company intends to file a Report on Form 8 K with the SEC shortly which will contain additional information about the transaction.
Dixie Sporting Goods is the nation's largest independent team sports distributor with annualized sales of approximately $18 Million. When combined with the Company's recent acquisition of Kesslers Team Sports, Collegiate Pacific now operates the nation's #1 and #2 team sports distributors. Each of Collegiate Pacific's acquired and organic properties service the institutional (non – retail) sporting goods channel and remain largely unaffected by fluctuations in consumer spending that often impact the retail sales channel.
In discussing the transaction, Michael Blumenfeld, CEO of Collegiate Pacific, stated: “We are pleased to have concluded this acquisition ahead of schedule, and to be complimenting our senior management team with Kenneth and Michael Caravati. Dixie will contribute substantially as we build upon our proprietary manufacturing and distribution platform. With the inclusion of Dixie, the Company expects FY05 (starting July 1, 2004) consolidated revenue to exceed $90M vs. $39M+ in FY04. The Company anticipates that operating income for FY05 will exceed $8M vs. $3M+ in FY04.”
“The combination of Dixie with our recently acquired Kesslers Team Sports and Tomark Sports properties brings the road sales force to 125 highly trained and productive salesmen. The next several months will be spent introducing this sales force to Collegiate's base of more than 3500 factory – direct products, with the Company's National Sales Meeting July 29-31 serving as the launching pad for this effort. Our intent is to generate incremental operating and earnings leverage through the infusion of CP proprietary products into these newly acquired sales teams. Initial results from the first three months with the Kesslers' sales force have been promising.”
“The completion of Dixie extends Collegiate's reach to more than 75,000 institutional accounts, and gives the Company #1 market position nationally in the distribution of team uniforms, and the direct distribution of team and school equipment. The Company has emerged from this transaction free of debt and with considerable resources for both internal and external expansion. While internal focus will remain on the production of 20-25% organic growth in our core units, Collegiate's primary external focus will now turn towards the acquisition of select companies who manufacture proprietary products consumed by a large percentage of our customers. Feeding new products into our growing distribution pipeline of catalogs, telesales and road sales professionals is an attractive prospect.”
“Since the Company's birth in 1998, the intention has been to create a one-stop sporting goods resource for schools and teams throughout the United States. The combination of the Company's factory direct equipment platform with Kesslers' and Dixie's branded team uniform platform allows Collegiate Pacific to service the complete athletic needs of the institutional space. With a full pipeline of both internal and external related activities on the horizon we look forward to the continued maximization of this platform for the benefit of our employees and shareholders.”