Fox Factory Holding Corp has reached an agreement to acquire Marucci Sports, the maker of baseball bats and gloves, from Compass Diversified (CODI) for $572 million.
Fox Factory, based in Duluth, GA, is best known for its Fox Racing Shox brand of off-road racing suspension components.
CODI acquired Baton Rouge, LA-based Marucci Sports in 2020 for a purchase price of $200 million. CODI has a past relationship with Fox Factory, acquiring the business in 2008 and taking it public in 2013.
Under the terms of the agreement, Marucci will be sold to Fox Factory for an enterprise value of $572 million, subject to certain working capital and other adjustments. CODI said in a statement it expects to realize a pre-tax gain on the sale of between $225 million to $245 million. Proceeds from the transaction will be used to pay down outstanding debt and for general corporate purposes.
In a separate statement, Fox Factory said the acquisition of Marucci “combines two high performance cultures, industry-leading brands and product portfolios that expand FOX’s enthusiast offering.”
Fox Factory said the purchase will be financed through an additional term loan under FOX’s existing credit facility. The acquisition is expected to be accretive to both growth and EBITDA margins, helping Fox Factory achieve its 2025 target of $2.0 billion in sales and 25 percent adjusted EBITDA margin. The transaction is expected to close in November of 2023, subject to customary closing conditions.
“We are very proud of the growth Marucci has seen under our ownership and feel fortunate to have been able to partner with the Marucci management team,” said Elias Sabo, CEO of Compass Diversified. “We acquired the business in April 2020 based on our confidence in Marucci’s brand and management team. This was at a time when few transactions were being completed due to the pandemic, yet our flexible capital structure allowed us to execute in times of uncertainty and generate value for our shareholders. Since then, the Marucci team has acted decisively, growing its core business and gaining share in new markets like fielding gloves and softball. Additionally, we expanded the Marucci product portfolio through the acquisitions of Lizard Skins and Baum Bat. Thank you to Kurt and the entire Marucci team for their contributions over the last several years, and we wish them nothing but continued success.”
Kurt Ainsworth, co-founder and CEO of Marucci Sports, commented: “We are grateful for our partnership with the CODI team and look forward to further growth under FOX’s ownership. FOX’s enthusiast culture, coupled with its focus on driving growth through strong brands, highly engineered products and disruptive technologies fits well with our values and mission. We look forward to leveraging their innovation and growth success as we expand our sales reach and breadth. We thank CODI for their relentless support during our partnership.”
The closing of this transaction is subject to customary terms and conditions, including regulatory approval, and is expected to occur in November 2023.
Jefferies LLC is acting as exclusive financial advisor and Ropes & Gray LLP and Jones Walker LLP are acting as legal counsel to CODI. Squire Patton Boggs (US) LLP is acting as legal counsel to FOX.