Bauer Performance Sports Ltd. (TSX:BAU) ("BPS" or the "Company"), a leading
developer and manufacturer of high performance sports equipment and apparel, has
entered into a definitive asset purchase agreement with Easton-Bell Sports to
acquire the Easton Baseball/Softball business for US $330 million in an all-cash
transaction, subject to a working capital adjustment. The purchase agreement was
unanimously approved by both companies' boards of directors and is expected to
close in approximately 30-60 days, subject to regulatory approvals and other
customary closing conditions.
The transformative acquisition greatly enhances the Company's performance sports
platform by adding EASTON, the world's leading and most iconic diamond sports
brand, to the other strong brands in the BPS portfolio, including BAUER,
MISSION, MAVERIK, CASCADE, INARIA and COMBAT. It also adds valuable intellectual
property to BPS and provides a significant counter-seasonal business to the
Company's existing revenue stream.
"The combination of the No. 1 brand in hockey and the No. 1 brand in diamond
sports is a perfect example of our ability to enhance our performance sports
platform," said Kevin Davis, President and CEO of Bauer Performance Sports. "Our
existing business is built on a heritage of investing in game-changing research
and development, intellectual property, authentic brands and strong consumer
connections. The Easton Baseball/Softball business is a perfect fit for our
overall platform."
The combined company would have generated pro forma sales and Adjusted EBITDA in
2013 (year ended December 31, 2013 for Easton Baseball/Softball and twelve
months ended November 30, 2013 for BPS) of approximately US $586 million and US
$94 million, respectively, excluding synergies that are expected to be realized
through operational efficiencies. The purchase price values Easton
Baseball/Softball at an Adjusted EBITDA multiple of 9.0x, including the value of
the tax benefit acquired as part of the transaction. Management expects the
acquisition to be immediately accretive to Adjusted Earnings per Share.
The acquisition will provide significant revenue growth opportunities for BPS,
which has experienced a 7% compound annual revenue growth rate from 2009 to
2013. Such opportunities include:
-- Expansion in the diamond sports segments currently served by Easton,
-- The expansion of Easton Baseball/Softball's apparel business to include
uniforms, and
-- Territorial expansion of the Easton Baseball/Softball business.
"The addition of Easton Baseball/Softball will increase our growth potential and
deliver immediate value to our shareholders," Davis said. "Just as we have done
in our hockey business, we expect to increase Easton's current 28% market share
in diamond sports by accelerating investment in product development and more
strongly connecting with consumers. Like the entire BPS organization, Easton
Baseball/Softball has a passion for improving the performance of athletes, and
we fully expect to raise the bar of innovation in diamond sports with this
acquisition."
As a result of the acquisition, BPS will own the EASTON brand and the Easton
Baseball/Softball business while Easton-Bell Sports will retain the Easton
Hockey and Easton Cycling businesses. At closing, BPS will enter into a license
agreement to permit Easton-Bell Sports to use the EASTON name in hockey and
cycling only. No other businesses from the Easton-Bell Sports portfolio are
included as part of this transaction. Easton Baseball/Softball will continue to
operate out of its current Van Nuys, Calif. and Salt Lake City, Utah locations.
BPS and Easton-Bell Sports have also agreed to settle certain intellectual
property litigation matters related to patents held by Bauer Hockey concurrently
with the closing of the transaction.
Transaction Financing
BPS intends to finance the transaction, and refinance certain existing
indebtedness, with a combination of approximately US $200 million of an
asset-backed revolving credit facility and approximately US $450 million of
senior secured loans. Bank of America Merrill Lynch, JP Morgan, Royal Bank of
Canada and Morgan Stanley have provided BPS with fully committed credit
facilities sufficient to close the transaction.
After the transaction closes, BPS intends to consider options it may have to
reduce its leverage, including repaying a portion of the senior secured loans
with the proceeds of public or private offerings of equity securities. There is
no assurance that such transactions will be available on acceptable terms.
Paul, Weiss, Rifkind, Wharton & Garrison LLP and Stikeman Elliott LLP acted as
legal counsel to BPS. Morgan Stanley acted as financial advisors and Ropes &
Gray acted as legal counsel to Easton-Bell Sports.
Conference Call
BPS will hold a conference call today, February 13, 2014, at 6:30 p.m. Eastern
time to discuss the transaction. The Company's President and CEO Kevin Davis and
CFO Amir Rosenthal will host the call, followed by a question and answer period.
Date: Thursday, February 13, 2014
Time: 6:30 p.m. Eastern time
Dial-in number: 1-888-846-5003
International dial-in number: 1-480-629-9856
Conference ID: 4669396
Please call the conference telephone number 5-10 minutes prior to the start
time. An operator will register your name and organization. If you have any
difficulty connecting with the conference call, please contact Liolios Group at
1-949-574-3860.
The conference call will be broadcast live and available for replay at
http://public.viavid.com/index.php?id=107943 and via the investors section at
www.bauerperformancesports.com.
Presentation slides that discuss the transaction will also be made available via
the investors section of the Company's website at
www.bauerperformancesports.com.
A replay of the conference call will be available after 9:30 p.m. Eastern time
on the same day through February 27, 2014.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 4669396
ABOUT BAUER PERFORMANCE SPORTS, LTD
Bauer Performance Sports Ltd. (TSX:BAU) is a leading developer and manufacturer
of ice hockey, roller hockey, lacrosse, baseball and softball equipment, as well
as related apparel. The company has the most recognized and strongest brand in
the ice hockey equipment industry, and holds the top market share position in
both ice and roller hockey. Its products are marketed under the BAUER, MISSION,
MAVERIK, CASCADE, INARIA and COMBAT brand names and are distributed by sales
representatives and independent distributors throughout the world. Bauer
Performance Sports is focused on building its leadership position and growing
market share in all product categories through continued innovation at every
level. For more information, please visit www.bauerperformancesports.com.
Non-IFRS Measures
This press release uses the following non-IFRS measures: EBITDA and Adjusted
EBITDA and Adjusted Earnings per Share. The foregoing non-IFRS measures are
defined as follows: Adjusted EBITDA is defined as EBITDA (net income adjusted
for income tax expense, depreciation and amortization, losses related to
amendments to the credit facility, gain or loss on disposal of fixed assets, net
interest expense, deferred financing fees, unrealized gains/losses on derivative
instruments, and realized and unrealized gains/losses related to foreign
exchange revaluation) before restructuring and other one-time or non-cash
charges associated with acquisitions, other one-time or non-cash items,
pre-initial public offering sponsor fees, costs related to share offerings, as
well as share-based payment expenses. Adjusted Earnings per Share is defined as
Adjusted Net Income/Loss divided by the weighted average diluted shares
outstanding. Adjusted Net Income/Loss is defined as net income adjusted for all
unrealized gains/losses related to derivative instruments and unrealized
gains/losses related to foreign exchange revaluation, non-cash or incremental
charges associated with acquisitions, amortization of acquisition-related
intangible assets for acquisitions since the company's initial public offering,
costs related to share offerings, share-based compensation expense and other
non-cash or one-time items.
The Company believes that these non-IFRS measures provide useful information to
both management and investors in measuring financial performance. These measures
do not have a standard meaning prescribed by IFRS and therefore, they may not be
comparable to similarly titled measures presented by other publicly traded
companies, and should not be construed as an alternative to other financial
measures determined in accordance with IFRS. These non-IFRS measures are
provided as additional information to complement IFRS measures by providing
further understanding of operations from management's perspective. Accordingly,
non-IFRS measures should never be considered in isolation nor as a substitute to
using net income as a measure of profitability or as alternative to the IFRS
consolidated statements of income or other IFRS statements.
Forward-Looking Statements
There can be no assurance that the acquisition will close or that an equity or
debt offering will be undertaken or completed in whole or in part or the timing
of any such transaction. No securities will be offered or sold in the United
States or to U.S. persons absent registration under the U.S. Securities Act of
1933 or the availability of an applicable exemption from such registration. This
press release does not constitute a solicitation of an offer to purchase, or an
offer to sell, securities in the United States or elsewhere. Closing of the
acquisition is not conditional on the completion of any of the foregoing.
This press release includes forward-looking statements within the meaning of
applicable securities laws, including with respect to the timing and completion
of the transaction (including financing thereof), the anticipated benefits of
such transaction, including, among others, potential revenue growth, increased
baseball/softball market share, the timing and scope of anticipated synergies
and operational efficiencies, the effective acquisition multiple and accretion
(which may be impacted by the offering price of any equity offering and other
final financing arrangements), expectations regarding a counter-seasonal revenue
stream to the Company's existing revenue stream and the successful expansion of
the Easton Baseball/Softball apparel business.
The pro forma information set forth in this press release should not be
considered to be what the actual financial position or other results of
operations would have necessarily been had the Company and Easton
Baseball/Softball operated as a single combined company, as, at, or for the
periods stated.
Forward-looking statements relate to analyses and other information that are
based on forecasts of future results and estimates of amounts not yet
determinable. The words "may", "will", "would", "should", "could", "expects",
"plans", "intends", "trends", "indications", "anticipates", "believes",
"estimates", "predicts", "likely" or "potential" or the negative or other
variations of these words or other comparable words or phrases, are intended to
identify forward-looking statements. Forward-looking statements, by their
nature, are based on assumptions, including those described herein and are
subject to important risks and uncertainties. Many factors could cause the
combined company's actual results to differ materially from those expressed or
implied by the forward-looking statements, including, without limitation, the
following factors: inability to introduce new and innovative products, intense
competition in the equipment and apparel industries, inability to introduce
technical innovation, inability to protect worldwide intellectual property
rights and related litigation, inability to successfully integrate acquisitions,
decrease in ice hockey, roller hockey, lacrosse and/or baseball/softball
participation rates, adverse publicity, reduction in popularity of the NHL, NLL,
MLB and other professional leagues in which our products are used, inability to
maintain and enhance brands, reliance on third party suppliers and
manufacturers, disruption of distribution chain or loss of significant customers
or suppliers, cost of raw materials and shipping freight and other cost
pressures, a change in the mix or timing of orders placed by customers,
inability to forecast demand for products, inventory shrinkage or excess
inventory, product liability claims and lawsuits, product recalls, compliance
with standards of testing and athletic governing bodies, departure of senior
executives or other key personnel, litigation and related matters, employment or
union related matters, fluctuations in the value of certain foreign currencies
in relation to the US dollar, inability to manage foreign exchange derivative
instruments, general economic and market conditions, changes in consumer
preferences and the difficulty in anticipating or forecasting those changes,
natural disasters, as well as the factors identified in the "Risk Factors"
section of Bauer's Annual Information Form dated August 27, 2013 available on
SEDAR at www.sedar.com.
Furthermore, unless otherwise stated, the forward-looking statements contained
in this press release are made as of the date of this press release, and we have
no intention and undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as required by law.
FOR FURTHER INFORMATION PLEASE CONTACT:
Bauer Performance Sports Ltd.
Amir Rosenthal
Chief Financial Officer
1-603-610-5802
investors@bauerperformancesports.com
Investor Relations: Liolios Group Inc.
Scott Liolios or Cody Slach
1-949-574-3860
BAU@liolios.com
Media Contact: Bauer Performance Sports Ltd.
Tory Mazzola
Global Communications Manager
1-603-430-2111
media@bauerperformancesports.com
www.bauerperformancesports.com
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