Samsonite International S.A. has agreed to acquire Gregory Mountain Products from Black Diamond, Inc. for $85.0 million in cash to be financed by Samsonite's internal resources as well as its revolving credit facility. The acquisition provides a perfect complement to Samsonite's High Sierra product offering and significantly broadens the company's presence in the outdoor category. The transaction is subject to certain closing conditions and expected to close in late July 2014.
"Gregory is another exciting new addition for us as we continue to strategically diversify our brand and product portfolio," said Tim Parker, chairman and chief executive officer of Samsonite. "Like Samsonite, Gregory is a leader and pioneer in its industry, responsible for many innovations in backpack design. It is well-respected by active outdoor and adventure enthusiasts as a leading brand in the premium technical backpack segment, and has won numerous awards such as National Geographic Magazine's Gear of the Year Award in 2012 and the coveted ISPO Award in 2013. We believe there is plenty of room to further expand the brand in the U.S. market by leveraging our marketing and distribution capabilities. Moreover, our geographic reach will also allow us to significantly grow the Gregory brand internationally."
A play on Asia's booming leisure travel market
"The global backpack market is experiencing strong growth," added Ramesh Tainwala, Samsonite's Chief Operating Officer. "People today are focusing more and more on healthy living, and the number of consumers participating in outdoor activities has been increasing steadily as a result." Together with the growing affluence of consumers in emerging Asian economies and the resilience of consumer spending on outdoor activities in developed regions, Tainwala said the global backpack market is expected to continue to post steady growth over the long term. "The transaction will enable us to cover this market with two well-known and respected brands ?Gregory in the premium segment and High Sierra in the mid-market ?offering us significant growth opportunities in the outdoor market," he continued. "Gregory's growth prospects are especially attractive in Asia where its outdoor-inspired lifestyle bags enjoy widespread popularity in both affluent markets, such as Japan and South Korea, as well as in emerging markets, such as China."
Black Diamond President and Chief Executive Officer Peter Metcalf thanked all employees and partners for their hard work and support in helping to build Gregory into a global leader in the outdoor segment. "We are proud of the strong reputation that Gregory has established and maintained over the nearly 40 years of its history, and are excited by its bright future under Samsonite's ownership," said Metcalf.
Gregory's 2013 sales
Founded in 1977, U.S.-based Gregory designs, makes and markets premium technical backpacking, mountaineering, and trail running products and accessories. The company's revenues reached $34.9 million in the year ended Dec. 31, 2013, up approximately 14.3 percent from from $30.6 million in 2012. Technical backpacks and accessories accounted for 72.3 percent of Gregory's revenue in 2013, while lifestyle backpacks and accessories accounted for the remaining 27.7 percent. North America accounted for 35.5 percent of Gregory's 2013 sales, while Japan and the rest of Asia accounted for 36.3 percent and 16.9 percent respectively, with the rest of the world taking up the balance.
Among its many achievements, Gregory led the industry in offering backpacks with a range ofdifferent frame sizes, waist belts and shoulder harnesses designed to provide an ergonomic and comfortable fit for both male and female consumers. It also pioneered a waist belt system that automatically adjusts to the angle of the user's hips in order to improve comfort while carrying weight. As part of its offering, Gregory markets a collection of lifestyle bags inspired by its design heritage and California roots that are particularly popular in Japan and elsewhere in Asia.
Samsonite on a roll
This is Samsonite's third strategic acquisition in 2014. The company announced at the end of May that it had acquired Speck Products, a leading U.S. designer and distributor of slim protective cases for personal electronic devices, and in April that it had acquired Lipault, a youthful French luggage company known for its functional and fashionable products. On Thursday, Samsonite announced it had increased its existing Revolving Credit Facility from $300.0 million to $500.0 million, giving it greater financial flexibility as it continues to evaluate acquisition opportunities globally.
As Samsonite continues to evaluate further potential acquisition opportunities that offer both a compelling strategic and financial rationale, the company has increased its existing Revolving Credit Facility from $300.0 million to $500.0 million, and extended its term from three years to five years, effective from June 18, 2014.
This larger facility gives Samsonite additional financial flexibility and capacity to pursue further acquisition opportunities as and when they become available.
