Golf Town, based in Toronto, reached an agreement to acquire Golfsmith International Holdings Inc. for about $96.5 million. Golf Town operates 54 stores across Canada and seven stores around the Boston area.
Golfsmith, based in Austin, TX, operates 85 stores across the U.S. The transaction will result in the creation of the world's largest specialty golf retailer, the companies said in a joint statement.
Under the terms of the agreement, the Toronto company will pay $6.10 per share in cash. The offer represents a 30 percent premium over Golfsmith's Friday closing stock price of $4.71. Shares of Golfsmith on Monday spiked 30 percent to hit a four-year high of $6.35
Based on Golfsmith's outstanding shares of approximately 15.8 million, the deal is worth about $96.5 million in all.
The closing of the acquisition, which is subject to limited closing conditions, including regulatory approvals, is expected to occur in the third quarter of 2012. The transaction is not subject to a financing condition.
Golf Town is owned by OMERS Private Equity.
“Golfsmith is a company that we have admired for years. This transaction will give us a formidable footprint in North America and will also provide a strong platform for future growth,” said Don Morrison, Senior Managing Director and Canadian Country Head of OMERS Private Equity. “Together with management we look forward to enhancing the value proposition for the companies' loyal customers.”
“We are extremely excited about this combination. Together, the businesses will have a broad multi-channel offering of retail, online, mobile and catalogue throughout North America,” said Ron Hornbaker, interim CEO of Golf Town.
“We have been very pleased with the building momentum at Golfsmith and I am proud of the accomplishments that our team has made over the last three years in developing a solid foundation for long term growth. We hold Golf Town in the highest regard and believe them to be an ideal partner to take Golfsmith to the next stage of growth,” said Martin Hanaka, CEO of Golfsmith.
Upon the closing of the transaction, Martin Hanaka will assume the role of CEO of the combined company. Sue Gove, President, COO and CFO of Golfsmith will become the President and COO of the combined company and Ron Hornbaker will assume the role of EVP-Stores.
The boards of directors of both Golf Town and Golfsmith have approved the transaction; in Golfsmith's case, following the approval and recommendation by a transaction committee of independent directors. Atlantic Equity Partners III, L.P. and certain officers of Golfsmith, holding collectively a majority of Golfsmith's outstanding shares of common stock, have executed a written consent approving the transaction and the transaction is not subject to further stockholder approval.
In connection with the transaction, BMO Capital Markets and TD Securities Inc. are acting as financial advisors to Golf Town, and Lazard is acting as financial advisor to Golfsmith. Legal counsel is being provided by Weil, Gotshal & Manges LLP for Golf Town and White & Case LLP for Golfsmith.
