Salt Lake City, UT – Backcountry ski and climbing gear specialist Black Diamond Equipment, Ltd., has signed an agreement to be purchased by Clarus Corporation for $90 million.nClarus was formerly a provider of e-commerce business solutions until the sale of substantially all its operating assets in December 2002, and has since been engaged in pursuing opportunities to acquire or merge with an operating business that would serve as a platform company. The deal, which includes a separate $45 million agreement for Clarus to purchase backpacking company Gregory Mountain Products, Inc., will be paid for approximately 50% 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. Both transactions have been unanimously approved by the board of directors of Clarus.
Black Diamond is well-known in the outdoor industry and holds over 60 patents in a broad range of products including carabiners, protection devices, belay and rappel equipment, helmets, ropes, ice-climbing gear, backcountry gear, gloves, tents, trekking poles, skis, ski bindings and ski boots. The newly merged firm will use the name Black Diamond Equipment, Ltd. and will remain based in Black Diamond’s current corporate headquarters in Salt Lake City.
Clarus said it expects that the company’s directors and officers will together own approximately 35% of the approximately 21.6 million shares of Clarus common stock outstanding at the closing of the transactions, which is expected to occur in the second quarter of 2010.
Clarus’ executive chairman, Warren B. Kanders, will continue as executive chairman of the new company. Robert R. Schiller, vice chairman of Gregory and former president, chief operating officer and a director of Armor Holdings, Inc., will be appointed executive vice chairman and a director of the company. Peter Metcalf, the co-founder, president and chief executive officer of Black Diamond, will be appointed president and chief executive officer and a director of the company. Robert Peay, chief financial officer of Black Diamond, will continue to serve in that role with the company following the closing of the transactions.
The company expects to further expand the Board of Directors to include Philip Duff and Michael Henning. Duff was an original investor in and currently serves as a Director of Black Diamond. Henning served in various capacities with Ernst & Young from 1961 to 2000, including Deputy Chairman from 1999 to 2000 and vice chairman of tax services from 1991 to 1993. The company anticipates that Henning will chair the Board’s Audit Committee.
In a prepared statement issued this morning, company officials say 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. They also plan future growth through additional purchases.
“We believe these brands create a unique platform to build a large, global, diversified company in the outdoor equipment and lifestyle markets both organically and through targeted acquisitions,” explains Kanders. “For nearly 30 years, Peter 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. Importantly, both Black Diamond and Gregory grew their businesses even during the recent economic downturn.”
“We view today as a milestone towards fulfilling our dream of building a unique company in our industry,” adds Metcalf. “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.”
In order to finance the cash portion of the transactions, Clarus will use the cash resources from its balance sheet and proceeds from an expected senior credit facility with Zions Bancorp, the incumbent lender of Black Diamond.