Gregory Mountain Products back in private hands following management-led purchase

It has been no secret to insiders that John Simons, president of Gregory Mountain Products, has been seeking to acquire Gregory since late 2007. On March 26, Simons announced to SNEWS® that he had gotten his wish. In an all-cash deal, Simons and fellow investors, Warren Kanders and Rob Schiller, snapped up Gregory from Bianchi International, owned by parent BAE Systems. Terms of the deal were not announced.
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It has been no secret to insiders that John Simons, president of Gregory Mountain Products, has been seeking to acquire Gregory since late 2007. On March 26, Simons announced to SNEWS® that he had gotten his wish. In an all-cash deal, Simons and fellow investors, Warren Kanders and Rob Schiller, snapped up Gregory from Bianchi International, owned by parent BAE Systems. Terms of the deal were not announced. Click here to read the official company press release posted to SNEWS®.

With this deal, Gregory returns to private ownership directly involved in the company operations, a place the company has not really been since 1983 when Bianchi, a company known for making holsters, acquired Gregory from founder Wayne Gregory. Bianchi then sold to Armor Holdings in 2004, and in August 2007, Armor Holdings was acquired by BAE Systems.

In speaking to SNEWS® shortly after the sale was announced, Simons said, "The goal for the whole team here at Gregory since I came here as president has been to enable Gregory to reach its full potential as a brand.

"I am now (as an owner) an enabler to sponsor allocating resources that allow us to grow organically and in harmony with the brand's heritage and tell a story of brand position and product innovation both internationally and domestically," said Simons. "Since this was an all-cash deal, the balance sheet is built for aggressive growth. And to the extent that we are able to extend our market and brand position and delight customers with products, we will find ourselves able to explore some non-organic growth possibilities as well."

When SNEWS® wondered what strategy Gregory had in place to regain some of the market share and brand momentum it had lost since the Armor Holdings acquisition, Dion Goldsworthy, director of international sales and marketing for Gregory, told us that the strategy was already being executed. Rewards were being realized with increased recognition of current product designs via editor choice awards as well as increased orders from retailers. He did acknowledge, though, that until this sale was announced, full attention to firing on all cylinders was not possible.

"With Armor and BAE, while they gave us as much as they could, we were constantly in a holding pattern to see what direction the company was going in. Armor and BAE were the wrong scale, the wrong industry, and not the proper fit for a brand like Gregory" Goldsworthy told SNEWS®. "This is clearly the most exciting opportunity for us, with a brand team and ownership that has a shared vision and commitment to the brand and able to bring the right focus and resources to play that ensure success."

To succeed and grow, Gregory will focus, SNEWS® was told, on fortifying its core competencies of developing products that earn awards and command consumer attention as a result. The company will strengthen its commitment to communicate the brand story and the brand's focus on outdoor specialty from a marketing standpoint on a global scale, not just domestically.

"We are going to continue to invest as we have over the last several years in products and design innovation and that strategy has seen recent results for us in solid growth in our export business, nice growth in our domestic market, and increase in our domestic bookings for this year," added Jim BoisD'Enghien, director of sales and marketing for Gregory.

All three men, while speaking to SNEWS®, spoke of passion and focus and culture and balance, which are elements, we learned, of the six fundamental principles that have guided the company since Simons came onboard. Those fundamentals are: uncompromised service, strategic design, respecting the planet, teamwork, integrity and cultural balance.

"Those are the things that define how we behave as a brand going forward and make up the values and beliefs that drive us as a team," said Simons. It is also the fundamentals that drive how Simons looks at other companies that might be for sale to determine if they might be a good strategic fit. "If other entities we might look at for acquisition fit that bill, then how much fun would that be?"

For Simons, though, what really gets him excited is the fact that now he and a couple of friends, with the support of a great team at Gregory, get to be part of building something going forward -- something they all believe in. "We fundamentally want to have fun as businesspeople trying to make Gregory the best it can be. I love the outdoors and there are not many platforms in life where you get to have super customers, a super brand, global penetration, and get to build stuff that is fun and useful. The fact that this happens to be in the outdoor industry is a bonus!"

SNEWS® View: This is a deal that had to happen, and sooner than later. BAE Systems is a company whose primary focus is on military products. Gregory was a company that was simply along for the ride, rather like leaving a valuable piece of furniture in the house after you sell it simply because, well, no one really knows what to do with it. And, while Armor Holdings, also a company focused on military business, gave Gregory support, it too had bought a house with Gregory already in it. At the time of the Armor Holdings acquisition, there was talk of building a consumer business unit around Gregory, and early on, some acquisition explorations were made, but nothing came of it. Gregory muddled on, with a talented team and basic financial support, but no real direction and hamstrung simply because it was, well, that valuable piece of furniture in the house from a prior owner that didn't really fit the décor.

Kanders and Schiller, who were both executives at Armor Holdings, and who brought Simons in to run things at Gregory starting in 2006, believed in Gregory, its potential and the entire outdoor space. So much so that, with Simons, they formed a private equity fund, KSS Outdoor Holdings LLC. Gregory is their first -- though, we would doubt their last -- acquisition.

Coupled with the move of the company's headquarters to Sacramento, Calif., Gregory is undergoing a complete shift in a most positive direction. To our surprise, even Wayne Gregory is moving from his beloved home in Temecula, Calif. (he's not selling it, we're told), to a new home hear the company's downtown Sacramento digs.

Though terms of the deal were not announced, in typical SNEWS® style, we'll take a stab at putting some meat on the "terms were not disclosed" skeleton. Consider that BAE Systems acquired Armor Holdings for $4.53 billion estimated at 7.5 times EBITA, where, obviously, Gregory was a fraction of that. In 2004, Armor Holdings acquired Bianchi for $60 million in cash, reported at 6 times to 8 times EBITA. Looking back at historical numbers, comparing with sales reports and surveys from various sources, and doing our own bit of sleuthing, we believe Gregory is probably doing just shy of $20 million in annual sales, with $10 million in Japan, South Korea, Hong Kong and Taiwan. If all that is true, then we would estimate that the company sold for between $12 million to $15 million.

All in all, we applaud this move. The company now appears to be back in control of its own destiny -- owned by people who believe not only in the brand, but in the outdoor space and in having fun while making money. All good things. We would suspect that KSS Outdoor Holdings will move carefully, but with purpose to acquire companies that bolster Gregory as the centerpiece of a collection of companies that each fit together -- all matching pieces of furniture in the same house, especially built to support their look, feel, design and culture.

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