CARLSBAD, Calif., Jan. 11, 2017 /PRNewswire/ -- Callaway Golf
Company (NYSE:ELY) announced today it has acquired OGIO
International, Inc. for $75.5 million
in an all-cash transaction, subject to a working capital
adjustment.
The acquisition enhances Callaway's presence in golf while also
providing a platform for future growth in the lifestyle category.
Excluding non-recurring transaction and transition expenses,
Callaway's management expects the acquisition to be immediately
accretive to earnings.
"We are excited about OGIO becoming part of Callaway and believe
this acquisition aligns well with our stated goal of strategically
developing growth in tangential areas," commented Chip Brewer, President and Chief Executive
Officer of Callaway Golf Company. "Furthermore, there is a robust
strategic fit between the companies; both are strong brands with a
sports heritage that share a passion for creating high-quality,
performance-driven products. There is also significant overlap in
our supply chains and go-to-market strategies, which should allow
us to add value and create profitable growth."
Callaway projects the acquired business will generate annual
EBITDA of approximately $10 million
after the acquisition is integrated and the majority of operational
synergies are realized. Callaway estimates that the majority of the
operational synergies will be realized within two years. The
purchase price values OGIO at a multiple of approximately 7.6x this
projected EBITDA. Callaway also expects to realize significant
value from potential tax benefits associated with the
transaction.
In 2017, OGIO is expected to contribute to Callaway
approximately $45 million in revenue.
After absorbing non-recurring transaction and transition expenses
of approximately $7 million, OGIO is
expected to be dilutive by approximately $0.02 to Callaway's 2017 earnings per share but
is expected to be accretive thereafter.
Callaway intends to finance the transaction with cash on hand
and borrowings from its existing asset-backed credit facilities.
Latham & Watkins LLP acted as legal counsel and Lazard acted as
financial advisor to Callaway. Snell & Wilmer LLP acted as
legal counsel and Robert W. Baird & Co. acted as financial
advisor to OGIO.
Forward-Looking Statements
Statements used in this
press release that relate to future plans, events, financial
results, performance or prospects, including statements relating to
the expected benefits of the OGIO transaction, including the impact
on earnings, revenues and EBITDA, operational synergies,
diversification and growth opportunities, potential tax benefits
and the future business and prospects of Callaway and OGIO are
forward-looking statements as defined under the Private Securities
Litigation Reform Act of 1995. These statements are based upon
current information and expectations. Accurately estimating the
forward-looking statements is based upon various risks and
unknowns, including unanticipated difficulties or expenditures
relating to the transaction or the realization of the anticipated
synergies and other benefits; the response of customers, suppliers
and others to the announcement of the transaction; potential
difficulties in employee retention as a result of the
transaction; Callaway's future performance and its ability to
realize the expected tax benefits; consumer acceptance of and
demand for the company's products; the level of promotional
activity in the marketplace; unfavorable weather conditions; future
consumer discretionary purchasing activity, which can be
significantly adversely affected by unfavorable economic or market
conditions; future retailer purchasing activity, which can be
significantly negatively affected by adverse industry conditions
and overall retail inventory levels; and future changes in foreign
currency exchange rates and the degree of effectiveness of the
company's hedging programs. Actual results may differ materially
from those estimated or anticipated as a result of these risks and
unknowns or other risks and uncertainties. For additional
information concerning these and other risks and uncertainties that
could affect these statements, see Callaway's Annual Report on Form
10-K for the year ended December 31,
2015 as well as other risks and uncertainties detailed from
time to time in Callaway's reports on Forms 10-K, 10-Q and 8-K
subsequently filed with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Callaway undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated
events.
About Callaway Golf
Through an unwavering commitment to innovation, Callaway Golf
Company (NYSE:ELY) creates products designed to make every golfer a
better golfer. Callaway Golf Company manufactures and sells golf
clubs and golf balls, and sells golf accessories, under the
Callaway Golf® and Odyssey® brands worldwide. For more information
please visit www.callawaygolf.com.
About OGIO
Known for its adrenaline-raising designs and exceptional product
performance, OGIO International, Inc., helps consumers to carry
their passion. OGIO designs and sells bags, accessories and apparel
for the golf, lifestyle, motorsports and endurance categories on a
global basis. For more information please visit
www.ogio.com.
Contact: Robert
Julian
Patrick Burke
(760) 931-1771
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SOURCE Callaway Golf