New York private equity firm Kohlberg & Co. is buying Newell Brands winter sports businesses for $240 million, ending several months of uncertainty for storied snowsports brands such as K2, Volkl and Boulder’s Backcountry Access.
“We are pleased with the outcome as we know that Kohlberg & Company, LLC is the right owner for our winter sports businesses,” reads a letter K2 Sports chief Robert Marcovitch sent to his business partners Friday. “Kohlberg brings many years of successful experience investing in leading consumer branded companies, and with Kohlberg we will have an owner who is exclusively focused on helping our company achieve its full potential.”
International consumer goods company Newell Brands last fall announced it was reshuffling its portfolio after its merger with Jarden Corp., which created a $15 billion company. Part of the reorganization included shedding about 10 percent of the company, including its winter sports stable. Those brands include K2, Volkl, Marker, Dalbello, Madshus, Line, Full Tilt, Atlas, Tubbs, Ride and BCA.
Newell chief Michael Polk riled the wintersports community last fall when he told investors he planned to “rapidly exit” under-performing brands, saying he would like to sell the assets “versus simply walking away from them.”
“Some of them are the kinds of businesses that would be difficult to sell and therefore, we should just shut down because they create no value for you and they are a distraction for us,” Polk said at the Barclay’s Consumer Staples Conference in Atlanta in September.
The idea that those brands could be abandoned was disconcerting for the snowsports retail industry. K2 and Volkl in particular are heavy hitters, controlling close to a third of the U.S.’s $260 million alpine ski market. Polk suggested he would sell the assets in the first half of 2017, providing a brief timeline to sell some of skiing’s most iconic brands.
“It’s nice to know there’s an excited new owner for these iconic brands. But BCA is so organic it’s doubtful any of it will affect us,” said Bruce Edgerly, the co-founder of Backcountry Access, a pioneer in avalanche safety tools and education. “Even under K2, Jarden, and Newell’s watch, we’ve maintained our own location, customer service, sales, marketing, product development and culture. We’re still backcountry skiers at heart and happy to be ‘outliers’ in the organization — so we can continue to focus on what we love about this industry: chasing powder and saving lives.”
Kohlberg & Co. for more than 30 years has acquired middle market companies, organizing private equity funds worth $7.5 billion. Since 1987 the company has made 70 investments and 156 acquisitions worth more than $10 billion.
Newell Brands reported Friday that it expects $240 million from the sale. Net sales for Newell Brands’ winter sports group were $330 million in 2016 and adjusted earnings before interest, taxes, depreciation and amortization was about $25 million. That puts the sale price at 9.6 times annual earnings
