Via the American Alpine Institute’s twitter feed comes interesting news that well-known climbing gear companies Black Diamond and Gregory are being acquired in separate transactions by Clarus Corp. for a combined $135 million:
The combination of Clarus, Black Diamond, and Gregory (together, the “Company”) intends to serve as a public company platform within the outdoor equipment and lifestyle markets with opportunities for growth both organically and through targeted, strategic acquisitions.
Under the terms of the agreements, Clarus will pay $90 million in cash for Black Diamond, subject to adjustments, and $45 million for Gregory, subject to adjustments, approximately 50% of which will be paid with Clarus common stock valued at $6.00 per share and approximately 50% of which will be paid with a seven-year 5% subordinated note. In addition, certain shareholders of Black Diamond will use a portion of their cash consideration to purchase shares in Clarus at $6.00 per share.
As part of this acquisition, Clarus is seeking approval from shareholders to change their name to “Black Diamond Equipment” and move their headquarters to Salt Lake City, UT.
The story on MarketWatch.com also includes some additional details on the businesses of both Black Diamond and Gregory as well as the vision going forward for the combined company:
For the year ended December 31, 2009, on an unaudited basis, Black Diamond and Gregory together produced combined revenues of approximately $113 million.
The Company believes that the integration and combination of Black Diamond and Gregory will produce incremental profit primarily from revenue synergies created through leveraging each business’ distribution network to grow various product categories and brands in geographies and end markets in which they currently are not sold, as well as from cost savings. Approximately 50% of the Company’s sales are expected to be in North America, approximately 30% in Europe, and approximately 20% in Asia, Africa, the Middle East and South America.
“For nearly 30 years, Peter (Metcalf, Black Diamond Co-Founder) has grown Black Diamond and its predecessor from a business with under $1 million in annual revenue to one with approximately $86 million in calendar year 2009, a compound annual revenue growth rate of over 16%, which is nothing short of outstanding,” Mr. Kanders (Executive Chairman of Clarus) continued. “Importantly, both Black Diamond and Gregory grew their businesses even during the recent economic downturn.”
Peter Metcalf (Black Diamond Co-Founder) said, “We view today as a milestone towards fulfilling our dream of building a unique company in our industry. Black Diamond and Gregory have complementary product lines and distribution and the cultural fit between the organizations is excellent. We are excited to be working with Gregory and its Founder, Wayne Gregory. We now expect to have the opportunity for growth on a much larger scale than has been previously available to us as a private company and we believe that our financial and operational discipline will make us an excellent public company. We look forward to demonstrating a superior ability to create value for our customers, vendors, partners, and stockholders.”
It’s a bit unclear from reading the various stories and conference call transcripts what the new merged company will look like so I’ll update this post if more details become available.
Update: Press Release from Black Diamond
What is not changing? Our commitment to our mission vision and values, and our efforts to help write the stories of the sports and the communities which inspire us. This shared passion is the universal Esperanto that connects us with fellow climbers & skiers no matter where we are. We view this new route in front of us as not only a method to growth, but as a collaborative effort through which we will strengthen and expand the way we do business and our community of fellow users.
For those of you who have been around awhile this is not the first time we have stood in front of you and spoken about big change. In November 1989 we spoke about our vision for a future together and a business model driven by the ethos of our sports, lifestyles and culture. We would like to believe that the last few decades have validated that vision and our commitment to it. Looking forward at yet another clean undone line, BD remains more committed then ever to that vision. We understand that the future will be the only arbitrator and that talk at this point is just that, talk. You should have been here yesterday is now you NEED to be here tomorrow. Let the future be our judge.
Update #3: Statement on Gregory’s Blog