Year of the deal: Outdoor buyouts, mergers and spinoffs, oh my!

Entering the final quarter of 2012, more than a dozen transactions have stirred up the tight knit outdoor industry. It serves both as a sign of future confidence among the buyers, and perhaps some shakiness among the sellers. SNEWS looks back at the deals, plus a prediction of more to come.
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Transaction

Date

Price

Wolverine Worldwide acquires Collective Brands' Peformance and Lifestyle group

May 2012

$1.23 billion

Primaloft spins off from Albany International

May 2012

$38 million

Black Diamond Inc. acquires Poc Sports

June 2012

$43.5 million

Schoeller merges with Eschler

June 2012

Undisclosed

ABC-Mart Inc. acquiresLacrosse Footwear

July 2012

$138 million

Ontario Teachers’ Pension Plan purchases 75 percent majority ownership of Helly Hansen

July 2012

Undisclosed

Samsonite acquires High Sierra Sport Co.

July 2012

$110 million

Leatherman Tool Group acquires PocketToolX

Aug. 2012

Undisclosed

Implus acquires Kako IceTrekkers

Aug. 2012

Undisclosed

Scott Sports USA acquires Garmont N.A.

Sept. 2012

Undisclosed

Black Diamond Inc. acquires Pieps

Sept. 2012

$10.4 million

5.11 Tactical acquires Beyond Clothing

Oct. 2012

Undisclosed

Black Diamond Inc. to acquire its Japan distribution

Jan. 2013

Undisclosed

Columbia Sportswear to acquire 60 percent share of its China distribution

Jan. 2014

Undisclosed

Outdoor buyouts, mergers and spinoffs are back in style for the first time since before the Great Recession.

Thank cheap money and plenty of opportunities.

Entering the final quarter of 2012, more than a dozen transactions have stirred up the tight knit industry. It serves both as a sign of future confidence among the buyers, and perhaps some shakiness among the sellers. But overall, investors are bullish about the outdoors, and with record low interest rates, they’ve been willing to spend.

Look for that trend to continue in the near term and into 2013, said Nathan Pund, managing director and head of the outdoor investment banking group at D.A. Davidson & Co. In early 2012, Pund forecasted to SNEWS a busy year in mergers and acquisitions, and he helped foster the recent Garmont North America/Scott USA and the High Sierra/Samsonite deals (see below). He tells us more deals are on the way.

“I think particularly in wintersports, you’re going to see a number of deals by the end of the first quarter next year,” Pund said. “The lack of winter last season, followed by this Indian summer has created financial constraints and some brands will be looking to sell.”

Europe on sale
There will be plenty more activity in Europe as well, Pund said. While the United States seems on track to slowly dig itself out of the recession, much of Europe is still muddling through economic turmoil with bailouts and austerity measures.

The muted economic conditions, combined with a fragmented outdoor market in Europe, present an opportunity for outdoor companies with more global aspirations and infrastructure to move in, said Black Diamond CEO Peter Metcalf.

Earlier this year, Black Diamondraised more than $60 million in a secondary stock offering to fund several acquisitions — the first two in Europe. In June, it acquired Sweeden-based helmet and protective gear brandPoc Sports for $43.5 million, and in September it purchased Austria-based winter safety brandPieps for $10.4 million.

“We see the opportunity for European brands to be part of Black Diamond, which would allow them to grow faster in North America and leverage our presence in Asia,” Metcalf told us this summer.

Elsewhere in Europe, Helly Hansen exchanged majority ownership in July when the Ontario Teachers’ Pension Plan in Canada purchased 75 percent of the Norwegian outdoor brand from private equity fund Altor for an undisclosed amount. Altor, which retains 25 percent ownership in Helly Hansen, purchased the brand in 2006.

Also in Europe, two of the outdoor industry’s top fabric players, Schoeller and Eschler, announced a merger this summer — combining Schoeller’s woven materials expertise with Eschler’s knits business.

Domestic deals
Outdoor deals also picked up at home in the United States, the largest being Wolverine Worldwide’s $1.23 billion purchase of Collective Brands’ Performance and Lifestyle footwear group in May. The deal brought together 16 brands, including Wolverine’s Merrell, Chaco and Patagonia Footwear with Collective Brands’ with Saucony. Wolverine funded the acquisition in part through an offering of $375 million in senior notes at a rate of 6.125 percent due in 2020. While that’s not as good as your home mortgage rate these days, it’s a pretty decent rate for a mid-risk-rated (Moody’s B2 rating) company in the industry.

Another outdoor footwear deal this summer involved Portland, Ore.-based Lacrosse Footwear Inc. and its Danner brand being sold to Japanese footwear retailerABC-Mart Inc. for $138 million. The new ownership recently led to leadership shakeup at Lacrosse — longtime CEO Joseph Schneider and CFO David Carlson both resigned their positions last week. Despite all the changes, officials said they will keep the brands’ offices and factories operating in Portland.

PrimaLoft found new ownership in 2012, when its management bought out the fabric and insulation brand from its parent companyAlbany International in May for $38 million. The new independent status for PrimaLoft, now led by President and CEO Michael Joyce, will allow the New York-based company to better reinvest its profits toward future innovation and growth, he said.

The adventure travel category picked up steam within the outdoor industry this past year, and luggage stalwart Samsonite took notice, scooping up Illinois-basedHigh Sierra Sport Co. for $110 million in July. Samsonite officials said the deal was funded through internal sources plus the company’s recently expanded $300 million revolving credit facility.

Smaller deals were also prevalent in 2012. Portland, Ore.-based Leatherman Tool Groupgrew this summer with an acquisition of Seattle-basedPocketToolX. And North Carolina-based Implus, parent to Yaktrax, strengthened its grip on footwear traction by purchasingKako IceTrekkers, including the Spikes, Chains, and Diamond Grip lines.

Distribution deals
Outdoor brands also changed up their distribution business ownership in 2012.

The most recent headliner was Garmont North America, exchanging hands for the third time in four years. Back in 2008, Garmont’s Italian parent bought out its North American distributor to take it on as a wholly-owned subsidiary. That didn’t last too long. Two weeks ago, Garmont North America went back to being run by a third party distributor — this time by Scott Sports USA, which will merge the U.S. operations here within its own.

U.S. brands, in the meantime, seem to have their eye set on gaining greater distribution control and profits abroad, particularly in Asia.

In late September, Black Diamond Inc.announced that it would purchase its Gregory Mountain Product brand’s Japanese distribution business from Kabushiki Kaisha A&F for an undisclosed amount, effective Jan. 1, 2013.

“Similar to our internal distribution platform in Europe, controlling our own distribution in Japan is expected to allow Black Diamond to develop a robust platform to support and scale recent and potential future acquisitions in this important market,” Metcalf said.

In somewhat similar strategy, Columbia Sportswearannounced a deal in August that will give it a 60-percent stake of its products’ distribution business in China starting in 2014. The company signed a joint-venture agreement with its current Columbia and Mountain Hardwear distributor Swire Resources Ltd., for an undisclosed amount.

“That’s additional revenue and income and gives us a more active role in China,” Columbia Senior Director of Corporate Communications Ron Parham told SNEWS at the time. “From a retail and consumer standpoint, it will bring a more consistent presentation of the Columbia and Mountain Hardwear brands and expand the retail network over there.”

Defensive deals
Beyond wintersports and Europe, look for the upcoming changes to U.S. military funding to generate a flurry of deals in the outdoor sector, Pund said. “With military spending being cut and the wars winding down, there will be companies looking to sell and others looking to buy waiting for the next war,” he said.

Movement in the sector mustered up last Thursday when military and law enforcement brand 5.11 Tactical announced the acquisition ofBeyond Clothing, known best for its custom, made-in-the-USA outdoor apparel. Rick Elder, formerly of Smith Optics before joining 5.11 Tactical in August, will lead Beyond as its new president, while Beyond founder Scott Jones will take on the role of chief designer. Beyond will continue its operations in Seattle as a separate division of Tactical.

Military spending questions may also have played a role in the aforementioned PrimaLoft and Lacrosse deals, both of which conduct a significant amount of military business.

Deals still to come
SNEWS has reported several more deals in the works.

France-based Lafuma Group, parent to Millet and Eider, confirmed in September that it is in early talks to possibly sell the company to South Korean conglomerate E-land.

Spyder Active Sports
is reportedly up for sale, according to unnamed sources in a New York Post story, with current private-equity owner Apax Partners reportedly looking to fetch $150 million for the Boulder, Colo.-based ski apparel brand.

And Polartec officials hinted at an eventual sale for the Lawrence, Mass. performance fabric company after its CEO Andrew Vecchione stepped down this summer.

“It all makes for a very busy market,” Pund said. “I think transactions will be even more aggressive to start 2013.”

UPDATE: The aquisition activity indeed continued into late 2012 and early 2013, with deals including:
>> Johnson Outdoors buying Jetboil
>> Katadyn acquiring camping food brands Natural High, Richmoor and AlpineAire
>> Versa Capital buying Eastern Mountain Sports
>> K2 Sports purchasing Backcountry Access

>> Calida Group investing in Lafuma after the aforementioned E-land deal fell through.

--David Clucas

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