Golf Galaxy, Inc. has signed an agreement to purchase The GolfWorks, one of the golf industry's sources for golf club components, clubmaking tools and supplies, and technical information. The acquisition is expected to close in early March.
The purchase price, subject to customary closing adjustments, consists of a combination of approximately $4 million in cash; Golf Galaxy common stock valued at approximately $4.5 million; and warrants to purchase 150,000 shares of Golf Galaxy common stock, valued at approximately $1.5 million. In addition, Golf Galaxy will assume approximately $5 million in debt from The GolfWorks. The GolfWorks had fiscal 2005 net sales of approximately $24.5 million. Golf Galaxy said it expects the transaction to be neutral to earnings per share in fiscal 2007 and accretive to earnings per share beginning in fiscal 2008.
“The acquisition of The GolfWorks will enhance the performance and productivity of our stores by adding new products and a new customer base, reinforcing our 'Everything for the Game' strategy. In addition, The GolfWorks' capabilities will help us grow our direct business,” said Randy Zanatta, president and chief executive officer of Golf Galaxy. “We believe this is a great opportunity to build on the success that The GolfWorks has achieved and grow both of our brands.”
The GolfWorks operates a direct-to-consumer business through its catalogs and its ecommerce site, selling both proprietary components and brand name shafts and grips. Founded by Ralph Maltby in 1976, The GolfWorks, based in Newark, Ohio, has been manufacturing and distributing golf clubs, machines, gauges, tools and supplies worldwide to golf club repair shops, golf professionals, manufacturers, custom clubmakers and hobbyists for 30 years.
Maltby is recognized throughout the golf industry as a technical expert. His books have been the standard teaching manuals for the Professional Golfers' Association of America for the past 28 years. In 2002 Maltby developed the proprietary Maltby Playability Factor(TM), a clubhead rating process that objectively identifies specific clubhead performance characteristics and separates all models into five distinct playability levels. Maltby also has produced a comprehensive video series on various aspects of clubmaking, design, repair and fitting.
In addition to its domestic operations, which include an assembly and distribution center, and customer contact center, The GolfWorks has an operating division in Ontario, Canada. The GolfWorks has approximately 100 full- and part-time employees, all of whom will be retained with the acquisition. Following the close of the acquisition, Ralph Maltby, founder and chairman of the board of The GolfWorks, and Mark McCormick, its chief executive officer, will join Golf Galaxy's management team. The GolfWorks will operate as a wholly owned subsidiary of Golf Galaxy.
“This is an exciting new chapter for The GolfWorks,” said Maltby. “We look forward to sharing our technical expertise with the Golf Galaxy team, extending The GolfWorks brand to brick and mortar retail stores, and working together to develop additional product and service offerings for golfers of all skill levels.”
Although several Golf Galaxy stores and GolfGalaxy.com currently offer The GolfWorks' assortment of tools, components, shafts and grips, following the acquisition, Golf Galaxy plans to offer a greater selection of these items both online and in its stores. Golf Galaxy plans to feature The GolfWorks “store in a store” concept in 29 of its stores by mid-May and in all of its stores by this fall.
