A customer leaves the Just Hockey Toronto hockey equipment store in the Eglinton Avenue East and Don Mills Road area on April 15.Fred Lamb/Globe and Mail
The maker of the sticks used by National Hockey League stars Auston Matthews, Connor McDavid and Sidney Crosby to put pucks in the net is up for sale.
On the eve of the NHL playoffs, private equity fund manager Birch Hill Equity Partners put CCM Hockey on the auction block. CCM, one of two major hockey equipment companies, is expected to sell for a significant double of the $110 million Birch Hill paid for the business seven years ago. There is.
Toronto-based Birch Hill recently hired U.S. investment bank Robert W. Baird & Co. Inc. to execute a potential sale, according to two sources involved in the process. did. The Globe and Mail is not naming the sources because they are not authorized to speak for the companies.
Sources said Birch Hill decided to acquire Montreal-based CCM after receiving several unsolicited offers for the gear maker from private equity funds. There is no guarantee the process will result in a sale, they said. Spokespeople for Birch Hill, CCM and Baird declined to comment.
Potential buyers for CCM include sporting goods manufacturers and major private equity funds, people familiar with the matter said. Birch Hill plans to complete the process by summer, with or without a sale, to avoid long periods of uncertainty over ownership, one of the people said. CCM has 500 of his employees, according to a recent press release.
Birch Hill acquired CCM from Adidas AG in 2017 as the German manufacturer shifted its focus back to shoes. Baird, an investment bank based in Milwaukee, Wisconsin, advised Adidas on the sale.
At the time, CCM was in the red. In a press release announcing the deal, Birch Hill said it acquired the company because “CCM has a clear path to improved margins and the potential to expand market share.” .
Over the past seven years, CCM has more than doubled its revenue and boosted its profit margins by acquiring businesses such as sports apparel companies and skate blade manufacturers. The company currently earns $75 million a year in earnings before interest, taxes, depreciation and amortization (EBITDA), one of the people said. Private equity owned companies like CCM tend to sell at multiples of EBITDA.
One source said CCM's most profitable business lines are hockey sticks and apparel. The limited edition Auston Matthews his Jet Speed stick is autographed and sells for $499, but the beer league player has his stick made of carbon fiber, Kevlar, and other composite materials. You can easily spend $300.
Private equity fund managers like Birch Hill typically buy companies, spend up to 10 years turning them around, and then sell them, giving backers a profit while retaining about 20 percent of the profits. to reduce.
In 1994, veterans of Toronto-Dominion Bank TD-T founded Birch Hill, and the company now manages $5 billion in capital. Over the past 30 years, Birchhill has invested in 71 of his companies, of which he has sold 57.
The Baird investment banker handling Birch Hill's sale of CCM is Joe Pellegrini, a former National Football League lineman who now works on mergers and acquisitions involving consumer products companies, one of the sources said. He says he is focusing on it.
CCM supplies sticks, skates and helmets to approximately 40 percent of NHL players, as well as stars of the Women's Professional Hockey League like Sarah Nurse. The company's main competitor is Bauer, which also has about 40 percent of NHL pros using its gear. CCM executives have said in the past that the hockey equipment business is relatively mature, growing at about 2% a year, and that the key to success is gaining market share from competitors.
Another major hockey stick manufacturer is Sherwood Hockey, owned by Canadian Tire Inc. CTC-T, which scored last year by signing No. 1 draft pick Connor Bedard. Canadian Tire acquired the 66-year-old Sherwood brand in 2018.
In addition to CCM, Bauer, and Sherwood, other small hockey rink companies include New Balance and True Temper Sports. According to data service Mordor Intelligence, hockey players around the world spent his US$1.9 billion on equipment last year.
CCM's roots date back to 1899, when the company was founded as Canada Cycle & Motor Co. Ltd. Six years later, CCM pivoted into hockey equipment, manufacturing his skate blades using scrap metal from bicycle and auto parts factories. By the 1930s his CCM dominated the market and 90% of hockey players were wearing his CCM skates.
In 2004, Reebok acquired CCM for US$400 million, including debt. The following year, Adidas acquired Reebok.
CCM's rival Bauer, founded in Kitchener, Ont., in 1927, also returned to Canadian hands after being owned by a global shoe company and a private equity fund.
In 1995, Nike Inc. acquired the Bauer and Cooper Sports brands for US$395 million. In 2008, the company sold Bauer to a group led by Canadian businessman Graham Rousteing and American investment firm Kohlberg & Company for $200 million and exited hockey. The company went public in 2014.
Peak Achievement Athletics Inc. acquired Bauer in 2017. Peak is a partnership between Sagard Holdings Inc., a subsidiary of Montreal-based Power Corp., and Fairfax Financial Holdings Ltd., headquartered in Toronto.
