Kohlberg & Company, a U.S. private equity firm, has agreed to take over Völkl, K2, Marker and eight other winter sports brands that were put up for sale by Newell Brands, in a deal that is expected to generate proceeds of $240 million. Newell has reached a separate agreement to sell the Zoot and Squadra brands to a small group of managers.
The eleven brands together reached sales of about $330 million and adjusted Ebitda of $25 million in 2016, pointing to an acquisition multiple of 9.36 times Ebitda. The transaction is expected to close late in the second quarter or early in the third quarter of 2017, subject to customary conditions and regulatory approval.
The winter sports brands to be divested became part of Newell Brands when this entity was formed last April, after the acquisition of Jarden Corporation by Newell Rubbermaid. It quickly became clear that Newell would want to spin off some of the former Jarden brands in order to help pay for the deal, which gave Jarden an enterprise value of $20.2 billion including assumption of $5.2 billion debt, and to improve operating margins. Newell announced in October that it would offload the winter sports brands while holding on to Marmot Mountain, another former asset of the Jarden group.
Völkl, the German ski brand, and K2, its American counterpart, are the two most prominent brands in the deal with Kohlberg, along with Marker, which specializes in ski bindings. Others include Dalbello, the Italian alpine ski boot specialist, and Madshus, the Norwegian cross-country ski brand. The package sold to Kohlberg also includes Atlas and Tubbs, which sell snow shoes; Line, a small ski brand managed by K2 Sports; Full Tilt, which specializes in boots; Ride snowboards and Backcountry Access (BCA), which focuses on snow safety products.
Not to be confused with Kravis Kohlberg Robert (KKR), Kohlberg & Company was formed in 1987 when KKR's founder, Jerome Kohlberg Jr., resigned from that investment firm over differences in strategy. Kohlberg & Company describes itself as a leading private equity firm specializing in mid-market investments. In the consumer goods industry, they include Bauer, the ice hockey equipment brand that it bought from Nike in 2008, which went on to form the now bankrupt Performance Sports Group after it went public in 2011.
It remains to be seen what the buyer's intentions are with Jarden's former winter sports brands, but some were quick to speculate that Kohlberg could sell off some of them.
With the two deals announced last week, Newell has divested a large chunk of sports and outdoor brands acquired through Jarden, but it retains Marmot, Coleman and Campingaz, along with Rawlings and several other sports brands, mostly in the fishing tackle market.
Zoot and Squadra are being taken over by Zoot Squad, a Californian company established by several members of the management team. They include Shawn O'Shea, the group's general manager, and Dan Weatherford, the founder and previous owner of Squadra. Zoot is a triathlon apparel and footwear brand, while Squadra makes cycling and triathlon apparel.
The deal puts an end to uncertainty for the winter sports brands, but it comes after several other changes of ownership in recent years. K2 Corp acquired Völkl, Marker and Marmot in 2004. Three years later K2 was integrated into Jarden, which already owned Coleman and other camping and fishing brands. They all became part of Newell when the specialist in rubber products acquired Jarden last year.
Völkl has fared relatively well in recent years, which has been attributed to the company's hard-fought strategy to continue manufacturing most of its equipment in Germany – instead of moving production to the large-scale K2 facilities operated by K2 in China.