By Eric Smith
Two large acquisitions in the outdoor space bookended November—Canada Goose bought Baffin to kick off the month and Callaway bought Jack Wolfskin to close it—while a flurry of M&A activity occurred in the days between.
For this month’s M&A Roundup, SGB is highlighting those two deals because they should be transformative for both the buyers and the sellers, as well as their respective industries.
Entering the footwear category with a bang, Canada Goose Holdings Inc. started November with the $24.8 million acquisition of Baffin that Canada Goose CEO Dani Reiss lauded on last month’s earnings conference call, about two weeks after the announcement.
“This is a dream acquisition for me as I’ve been watching and admiring Baffin for many years and I know them very well,” Reiss said. “I believe this is the right move for us to be able to start exploring the category look to ultimately launch Canada Goose footwear.”
Meanwhile, Callaway Golf Co. just last week agreed to acquire Jack Wolfskin for about $476 million, giving Callaway a solid entrance into the outdoor apparel and packs categories with a popular European brand.
“We are very excited to welcome the Jack Wolfskin brand into the Callaway portfolio,” said Chip Brewer, president and CEO of Callaway. “Jack Wolfskin is a premium outdoor brand with tremendous international reach, being a leading brand in the European market and having a substantial presence in China. It also helps Callaway expand its presence in the high-growth, active lifestyle category.”
Look for much more on the Callaway-Jack Wolfskin acquisition in an upcoming SGB “Behind The Deal” feature.
Another noteworthy announcement last month in terms of website clicks was BSN Sports adding to its portfolio with the acquisition of Mountain Mesa Sports, Inc. dba B&H Sports, Grand Junction, CO.
Here is the least you need to know about each of those selected November M&A deals:
The 411 – Canada Goose Holdings Inc. has acquired Baffin Inc., a Canadian designer and manufacturer of performance outdoor and industrial footwear, for C$32.5 million (US$24.8 million). The transaction, which is subject to customary closing adjustments, is being funded with available cash on hand and the issuance of C$1.5 million of restricted subordinate voting shares to the seller.
Reaction – “I am very excited by this step in our evolution. In joining the Canada Goose family, we could not be in better hands and I look forward to leading the business under their ownership as we realize the full potential of the Baffin brand.”
-Paul Hubner, President, Baffin
What’s next? – According to Reiss: “As I said before, this is not a merger. Canada and Baffin have distinct channels with all different customers … and that’s not going to change. Paul Hubner is a great footwear visionary and I’m very happy that he has joined our team and he’s going to help us form our strategy for Canada Goose footwear. And I’m really excited that this is the first step in us to be able to bring to market the best-in-class footwear products for Canada Goose, and I think this is the right way of doing that. At the same time we’re also going to make sure Baffin has resources that it needs to continue to thrive and to become the best version of itself.”
The 411 – Callaway Golf Co. announced that it has entered into an agreement to acquire Jack Wolfskin for €418 million, or approximately $476 million assuming a 1.140 Euro to US Dollar conversion rate, subject to certain purchase price adjustments. The acquisition furthers Callaway’s push into the active lifestyle category after its successful 2017 acquisitions of TravisMathew and Ogio. Jack Wolfskin is an international, premium outdoor apparel, footwear and equipment brand. The company designs premium products targeted at the active outdoor and urban outdoor customer categories.
Reaction – “[Callaway’s] acquisition of Jack Wolfskin (JW) was viewed as unconventional, and it will take some time for investors to digest, but we lean on management’s impressive track record with recent acquisitions and several pockets of untapped opportunity to get comfortable with Friday’s deal. While JW brings some execution risk and reduced visibility, there is sufficient [long-term]potential for the brand, and we maintain our positive stance on Callaway’s core into a product-rich FY19.”
-Brett Andress, KeyBanc Capital Markets
What’s next? – The acquisition is expected to close in the first quarter of 2019, subject to regulatory approvals and other customary closing conditions. Callaway intends to finance the transaction with a $476 million term loan facility, led by BofA Merrill Lynch and JP Morgan Securities LLC. SGB will be posting a more comprehensive look at this deal in the coming days.
The 411 – BSN Sports, a division of Varsity Brands, announced that it has finalized the acquisition of Mountain Mesa Sports Inc., dba B&H Sports, based in Grand Junction, CO. B&H, which has served athletic and team Sports customers since 1980, is the leading distributor of team sports apparel and equipment in the Western Slope region of Colorado.
Reaction – “For nearly 40 years, Cory Carlson and the talented B&H team have built a trusted, community-focused team Sports brand that earns loyalty from customers and pride from its employees and the local community. This is precisely the kind of culture that constitutes an ideal fit with BSN Sports, and we expect that the combined offering will create an incomparable one stop shop for the Western Colorado area. We look forward to a bright future together and to bringing immediate benefits to customers and employees alike.”
-Terry Babilla, President, BSN Sports
What’s next? – Cory Carlson, owner and president of B&H, said, “B&H Sports has proudly served our valued customers since 1980 with a premium on customer service and a passion for providing excellent branding options with competitive pricing. We are excited to join the BSN family and look forward to enhancing the team Sports buying experience for our customers and employees by providing additional resources, technology, and innovation. Of course, we also look forward to continuing the strong customer relationships that we have nurtured and sustained for more than three decades.”
**Other deals from last month. In case you missed it, here are other notable deals—announcements of either new acquisitions or ones that closed—that occurred in the sporting goods, outdoors and active lifestyle industries in November (click the headline to read the full story on each):
Photo courtesy Baffin