Compass Diversified Holdings (NYSE: CODI) (“CODI” or the “Company”), an owner of leading middle market businesses, announced that on July 29, 2016, it entered into a definitive agreement to acquire 5.11 Tactical® “5.11” for a purchase price of $400 million (excluding working capital and certain other adjustments upon closing). The acquisition is expected to close within the next 45 days, subject to customary closing conditions.
5.11 is a leading designer and marketer of purpose-built tactical apparel and gear serving a wide range of global customers including law enforcement, military special operations and firefighters, as well as outdoor enthusiasts. 5.11 is headquartered in Irvine, CA and operates international sales offices in Sweden, Mexico, Australia, China and UAE. For the trailing twelve months ended April 30, 2016, 5.11 reported net revenue of approximately $293 million and EBITDA of approximately $38 million. CODI expects to fund the purchase price through a draw on its revolving credit facility as well as exercising an accordion feature on its existing credit facility.
CODI’s initial equity ownership in 5.11 will be approximately 97.5%, and 5.11’s management team will also invest in the transaction alongside CODI. As part of the acquisition, CODI will acquire a substantial tax asset, the positive effect of which will be meaningful for CODI’s annual cash flow.
“5.11 represents a strong addition to our family of leading middle market businesses, and we welcome the opportunity to serve law enforcement, first responders, military personnel as well as the tactical consumer market,” said Alan Offenberg, CEO of Compass Diversified Holdings. “This company possesses the essential qualities that we seek in all our subsidiaries, including market share leadership, diverse revenue streams from a broad customer base and product portfolio, growing cash flows, a proven management team and compelling growth opportunities. We are enthusiastic about the company’s strong growth prospects and look forward to working with Tom Davin and his team to continue serving tactical professionals, and expanding 5.11’s consumer penetration globally.”
Mr. Offenberg added, “The acquisition of 5.11 will be immediately accretive to our shareholders and will further enhance our ability to continue to support our current cash distributions. We expect the acquisition to provide thirty to thirty-five cents per share of cash flow accretion to CODI on an annualized basis.”
Tom Davin, Chief Executive Officer of 5.11, and Francisco Morales, President will continue to serve in the same roles at the company. Mr. Davin commented, “At 5.11 our mission is to create purpose-built, functionally innovative tactical apparel and gear for the most demanding situations. CODI’s acquisition of 5.11 provides an excellent platform to further that mission. Our 5.11 leadership team is excited to leverage CODI’s considerable financial resources and track record of working with middle market growth companies.”
www.compassdiversifiedholdings.com/
Tags: 5.11 Tactical, Beyond
Beyond Clothing?
Yep – 5.11 bought them a while ago.
I should add, hopefully this doesn’t fuck up Beyond. I’m not terribly keen on anything 5.11 makes, but Beyond makes solid clothing.
+1, I have purchased a lot of beyond cold weather items and found them to be awesome up here in Maine. Let’s hope this acquisition doesn’t screw them up.
If you’re a retailer that still carries 5.11, might I suggest you explore other brands so your options are open when they decide to plop a store in your backyard.
“leading middle market businesses”
Isn’t that a polite way of saying really average? I hope Beyond doesn’t follow the same trajectory that befell 5.11s when Royal Robbins divested the pants.
Eh I’d say is more of a price point aim. 5.11 does a decent job offering worthwhile gear an LEO can afford. There is an art to it as almost every time I see a company go all out best everything on an item, people won’t shut up about how the price is too much. 5.11 isn’t Chinese copy garbage, but it isn’t USA Special Operations type gear either, it is right there somewhere in the middle.
Beyond makes some of the best clothing period, they better not mess with their offerings or direction!
I still love my 5.11 Stryke pants, so 5.11 can still do things right in my book.