Golf Town buys Golfsmith for $96 million in retail mega-merger
Mergers, acquisitions and consolidation have been a part of the headlines on the golf manufacturing side in recent weeks, but now the golf retail space is getting in on the game and in a big way.
Golf Town, the largest golf retailer in Canada with 54 stores, had begun expanding in the U.S. in the last two years by opening seven large stores in the Boston area. Today, it announced an even larger expansion: It will purchase U.S. retail giant Golfsmith.
Golf Town, which is owned by Toronto-based OMERS private equity firm, said Monday it has signed a definitive merger agreement to purchase Golfsmith International Holdings for $6.10 per share. Golfsmith closed at $4.71 on Friday. Golfsmith, which was founded 40 years ago as a clubmaking supply company but has since grown to become the largest golf-specialty retailer in the U.S. with 85 stores, had previously announced that it was pursuing strategic alternatives including the sale of the company. With 15.81 million shares oustanding, the Golf Town purchase price adds up to a little more than $96.4 million.
In a press release, Don Morrison, Senior Managing Director and Canadian Country Head of OMERS Private Equity said, ""Golfsmith is a company that we have admired for years. This transaction will give us a formidable footprint in North America and will also provide a strong platform for future growth. Together with management we look forward to enhancing the value proposition for the companies' loyal customers."
Among the plans for the merger: Martin Hanaka, current CEO of Golfsmith, will assume the role of CEO of the combined company. Sue Gove, President, COO and CFO of Golfsmith will become the President and COO of the combined company and Ron Hornbaker, who had been interim CEO of Golf Town, will assume the role of Executive Vice President-Stores.
"We have been very pleased with the building momentum at Golfsmith and I am proud of the accomplishments that our team has made over the last three years in developing a solid foundation for long term growth. We hold Golf Town in the highest regard and believe them to be an ideal partner to take Golfsmith to the next stage of growth," Hanaka said in a statement.
The Golfsmith model in recent years has been toward developing large square-footage "experiential" retail outlets with multiple hitting bays, large putting greens and an emphasis on clubfitting and increased apparel offerings. In addition, Golfsmith has seen substantial growth in the online arena with golfsmith.com.
Golf Town's model is similar. While it is Canada's No. 1 golf retailer and it bills itself as the second largest golf retailer in the world, it recently opened seven stores in the U.S., all in the Boston region in the last two years. That expansion included more than 100,000 square feet of retail space. Golf Town is also bringing a new technology to the clubfitting space through a partnership with Swing Labs, an unbiased, fitting sofware designed to more efficiently match players to clubs based on swing data.
The full text of today's press release announcing the acquisition is here.
--Mike Stachura**Follow me on Twitter @MikeStachura