Vista Outdoor Inc. (VSTO) is cooking now. On Thursday it acquired Camp Chef from privately owned Logan Outdoor Products LLC and Peak Trades, LLC.
Camp Chief offers solutions for outdoor cooking for almost any outdoor gathering, from camping to dinner on the back patio. The brand offers more than 250 products including camp stoves, barbecue grills, pellet grills, smokers, fire pits and a full line of cast-iron cookware and accessories.
The completed transaction enhances Vista Outdoor’s position within one of the camping market’s most attractive categories, complementing its already broad portfolio of 50 brands in shooting sports and outdoor recreation. Wholesale dollar sales in the camping category grew at a six percent Compound Annual Growth Rate (CAGR) from 2010 to 2015, according to the Sports & Fitness Industry Association. Camp Chef’s sales growth has been fueled by a strong product development pipeline and user-friendly products.
“The Camp Chef transaction aligns with Vista Outdoor’s strategy to deliver long-term value through acquiring complementary, market-leading brands that will benefit from Vista Outdoor’s balance sheet, distribution network, and sales and marketing expertise,” said Chairman and Chief Executive Officer Mark DeYoung.
He praised Camp Chef’s entrepreneurial management team and nimble and responsive product development process, which has enabled the company to continue to grow its market share in the outdoor cooking category.
“The brand serves many of our current consumers who are engaged in a wide variety of outdoor pursuits,” DeYoung said. “Acquiring Camp Chef strengthens our leadership position in outdoor recreation, allows us to enter the growing camping and outdoor cooking market, and the brand’s effective multi-product, multi-channel strategy increases our presence across both brick-and-mortar and e-commerce distribution platforms.”
Vista Outdoor will pay a total purchase price of $74 million for Camp Chef, comprised of $60 million in cash paid at closing and $14 million in cash to be paid in equal installments on the first, second and third anniversaries of the closing date, subject to certain conditions described below.
However, the effective purchase price is lower, due to value created by certain tax assets resulting from the transaction and the deferred purchase price structure, leading to an effective multiple of approximately 6.4 times Camp Chef’s expected calendar year 2016 EBITDA. Vista Outdoor financed the purchase price paid at closing using borrowings under its existing revolving credit facility.
Vista Outdoor expects the acquisition to be slightly accretive to full-year 2017 earnings per share (EPS), including impacts associated with transaction expenses. A majority of the payment of $14 million of deferred purchase price will be contingent on continued employment of key members of management and certain other conditions.
As a result, Vista Outdoor plans to record the payments conditioned on continued employment as a compensation expense in future periods in accordance with GAAP. However, for purposes of presenting certain non-GAAP financial measures, including adjusted EPS, Vista Outdoor expects to treat those deferred payments as deferred purchase price and will therefore adjust the payments out of its financial results in future periods as payments are made. The purchase price will also be subject to a customary working capital adjustment.
Camp Chef was founded in 1990 in Logan, UT, and has approximately 50 employees. The company will be integrated into the Outdoor Products segment of Vista Outdoor, which includes the hydration brand CamelBak and the paddle sports brand Jimmy Styks, which were acquired in 2014 .
“Camp Chef is excited to join the exceptional family of Vista Outdoor brands,” said Ty Measom, Camp Chef President. “The opportunity to be part of this dynamic company will provide for the future growth and success of Camp Chef as a leader in our market. The hard work and dedication of Camp Chef employees, past and present, has made Camp Chef what it is today. We look forward to the opportunities ahead.”
Photo courtesy Vista Outdoor and Camp Chef
