Helen of Troy Limited announced that one of its subsidiaries has entered into a definitive agreement to acquire Osprey Packs, Inc.
Founded in 1974, Osprey is among the largest maker of technical and everyday packs in the U.S. Its product lineup includes backpacks and daypacks for hiking, mountaineering, skiing, climbing, mountain biking, trail running, commuting, school, and adventure travel packs, wheeled luggage, and travel accessories. Helen of Troy said it believes the acquisition is an “important next step as it advances its strategic goal of acquiring and investing in businesses that can accelerate profitable growth in categories where it can add value and leverage its scalable shared services and operating platform.”
Helen of Troy also owns Hydro Flask in the outdoor space. Its other brands include OXO, Vicks, Braun, Honeywell, PUR, Hot Tools, and Drybar.
The total purchase consideration is expected to be approximately $414 million in cash, including an estimated $6 million favorable customary closing net working capital adjustment. The net purchase price implies a pre-synergy multiple of less than 13.5x estimated calendar year 2022 adjusted EBITDA, which compares favorably to Helen of Troy’s current EV/TTM adjusted EBITDA multiple of approximately 17.5x. It expects Osprey’s calendar year 2021 net sales revenue to be $155 million to $160 million.
The acquisition is expected to be accretive to Helen of Troy’s consolidated sales growth rate, gross profit margin, adjusted EBITDA margin, adjusted diluted EPS, adjusted diluted EPS growth rate, and cash flow from operations. As a result of the acquisition, it expects to end fiscal 2022 with a post-acquisition pro forma debt/adjusted EBITDA ratio approximately one-half to one full turn higher than its ratio as of August 31, 2021. As a result, the company believes it can “deploy capital to generate shareholder return.”
Julien R. Mininberg, Helen of Troy’s CEO, said, “We are delighted to welcome Osprey and its employees to the Helen of Troy family. For nearly half a century, Osprey’s premium products have delivered superior consumer-centric designs, innovative features and construction, outstanding materials and quality, and sustainability that resonate strongly with outdoor enthusiasts around the world. This acquisition adds an iconic ninth Leadership Brand that complements our world-class portfolio and adds critical mass to our value-creation flywheel. Combining the capabilities, authenticity, and credibility of this proven, highly respected outdoor pioneer with our global footprint and scalable global shared services creates opportunities for new efficiency and growth. Along with Hydro Flask, we can now serve and delight an even larger number of passionate end-users in the large and growing outdoor adventure category. We believe we are better together.”
Mininberg continued: “Approximately half of Osprey sales are outside the U.S., further accelerating our strategy to invest in international. We believe Osprey and Hydro Flask make a compelling combination in the U.S. and provide further critical mass internationally with thousands of additional retail doors that can benefit both brands and consumers. Osprey also further diversifies our international brand portfolio, and its focus on EMEA and the Asia Pacific matches our focus in those regions. On the design and operations side, Osprey’s design center and sourcing footprint in Vietnam offers an established platform to advance our product capabilities in soft goods and accelerates work already underway at Helen of Troy to further diversify our supply chain beyond China and Mexico.”
He added, “One of the many features that make Osprey special is its commitment to offer high-quality, low-impact products by utilizing sustainable design and manufacturing practices. Osprey incorporates low-impact chemicals and materials and recycled or recyclable packaging. It sources 100 percent renewable electricity and purchases carbon offsets for natural gas and company-owned vehicles used at its facilities in Colorado and Utah. This commitment extends to enhancing the well-being of their employees and communities through efficient building design at their Cortez, Colorado headquarters and contributing to environmental conservation. This business philosophy and practice is very much aligned with Helen of Troy’s ever-growing ESG ambitions.”
Mike Pfotenhauer, the founder of Osprey, said, “I want to extend my appreciation and reiterate my respect to all of my current and former Osprey colleagues and their families for their commitment not only to our company but to each other and their communities. Their dedication has built Osprey into a brand and family that millions of end-users trust and care about deeply. Osprey was founded 47 years ago with the dream of creating the perfect pack. We first began custom-making packs for mountaineers and adventure travelers headed to points unknown. Demand grew and grew and so did our expertise in design, manufacturing, and on-time delivery. Osprey’s top-quality, high-performance, innovative gear is a reflection of the brand’s love of adventure and devotion to the outdoors. Today’s announcement is a natural next step as we look to build Osprey further. I know it will be in good hands with Helen of Troy, with its proven stewardship of outstanding brands and global scale. Its culture and values are highly consistent with Osprey. We expect the combination of Osprey and Helen of Troy to create significant opportunities for our employees, vendors, and retail partners to experience the next phase of growth and meet even more of the needs of travelers everywhere on whatever trail they are on.”
The transaction is expected to close before calendar year-end 2021, subject to customary closing conditions, including regulatory approval.
