Compass Diversified has completed the company’s previously-announced sale of its majority-owned subsidiary, Wheelhouse Holdings, Inc., the parent company of Marucci Sports, LLC, to Fox Factory Holding Corp.

The sale price was based on an enterprise value of $572 million, subject to certain working capital and other adjustments. After these adjustments, as well as for an allocation to Marucci’s non-controlling shareholders and the payment of transaction expenses, CODI received approximately $485 million of total proceeds from the sale at closing. This amount was in respect of its debt and equity interests in Marucci and the payment of accrued interest. As previously announced, CODI expects to record a pre-tax gain of approximately $225 million to $245 million from the sale. Net proceeds will be used to pay down outstanding debt and for general corporate purposes.

Elias Sabo, CEO of Compass Diversified, stated, “We are pleased to complete our sale of Marucci Sports and believe the Marucci team is well-positioned for future success under Fox ownership. Our partnership with Marucci, which began in early 2020, proved highly successful, and we are grateful for Kurt and the Marucci team’s contributions over the years and look forward to their continued success.”

Jefferies LLC acted as exclusive financial advisor and Ropes & Gray LLP and Jones Walker LLP acted as legal counsel to CODI. Squire Patton Boggs (US) LLP acted as legal counsel to Fox Factory.

Fox Factory said the acquisition advances the company’s position as a diversified provider of market-leading branded products with a proven ability to win over both professional athletes and passionate consumer bases, while positioning the combined company for future profitable growth. Marucci will be part of FOX’s Specialty Sports Group (“SSG”).

Additional benefits of the transaction include:

  • The transaction is expected to be accretive across all key financial performance metrics for Fox, including revenue, EBITDA margin and earnings per share.
  • Marucci participates in a $3 million global TAM with a market share of less than 5 percent and has generated strong revenue and Adjusted EBITDA CAGRs of 22 percent and 33 percent respectively since 2019.
  • Fox’s aluminum and composite manufacturing along with the combination of highly engineered design innovations across both companies is expected to drive technology and sourcing synergies over time.
  • Marucci and its management team share Fox’s core values, including an obsessive focus on the athlete, a commitment to ensure innovation and product development drives every decision, and a focus on meeting the customer where they want to be met. Importantly, the existing Marucci management team will continue to run the day-to-day business based out of Baton Rouge, Louisiana.
  • The transaction immediately brings counter-cyclicality and enhanced diversification to SSG and to Fox overall. Further, it continues Fox’s track record of value-additive acquisitions outside of its legacy core shock and suspension business, which previously included Custom Wheel House, SCA and more.

“There are multiple vectors for additional growth, including a strong pipeline of player-tested future products, the currently under-penetrated softball market, Marucci’s unique e-commerce platform (Locker Room), and the expansion of the Hitter’s House offering,” the company said in a release.

“Our acquisition of Marucci represents a major milestone for FOX as we continue to identify ways to drive synergistic growth without compromising the core identity and values that have been so crucial to our success,” said Mike Dennison, CEO of Fox Factory. “This deal is not about baseball. It’s about adding a business to our platform that clearly meets our 1+1=3 growth criteria, given that each company’s individual power to grow and deliver shareholder value will be stronger together. Importantly, Marucci and its team share our commitment to winning through superior innovation and quality products in order to help drive leading positions in each of the key markets where we compete.”

Dennison continued, “This transaction makes us better from day one, not just by being immediately accretive in terms of both revenue and profitability, but by further diversifying our offerings and providing us additional leverage to extend the value of our brands. With a strong balance sheet and receding headwinds, such as the United Auto Workers strike, we are in a powerful position to deliver sustainable shareholder value.”

Fox recently reaffirmed its 2025 target of $2.0 billion in sales and a 25 percent adjusted EBITDA margin, which excludes Marucci.

The Marucci acquisition was financed through an incremental facility amendment under Fox’s existing credit facility, which includes a fully funded term loan of $400 million, with a $200 million delayed draw feature, at an interest rate that is 0.5 percent higher than the previous rate of the revolver.

Separately, Fox recently announced it intends to repurchase up to $300 million of shares, equating to approximately 8 percent of outstanding shares, under a new repurchase plan that expires November 1, 2028.

Squire Patton Boggs (US) LLP acted as legal counsel to Fox Factory Holding Corp. Jefferies LLC acted as exclusive financial advisor and Ropes & Gray LLP and Jones Walker LLP acted as legal counsel to Compass Diversified (the prior majority owner of Wheelhouse Holdings, Inc.).

Photo courtesy Marucci