German sportswear group Adidas AG has agreed to sell its CCM ice hockey brand to Canadian private equity firm Birch Hill Equity Partners for US$110 million ($138 million), it said on Thursday, as it focuses more strongly on its core Adidas and Reebok brands.
Adidas has shaken up its business in the United States and shed non-core businesses to regain ground lost to Nike Inc, outpacing its rival’s sales growth in key markets this year.
It sold its golf business this year, striking a deal in May to sell brands TaylorMade, Adams Golf and Ashworth to private equity firm KPS Capital Partners for US$425 million.
“The divestiture of CCM further reflects the commitment to our ‘Creating the New’ strategy, with complete focus on building on our strength in footwear and apparel via our adidas and Reebok brands,” Chief Executive Kasper Rorsted said in a statement.
Rorsted was installed to replace long-serving former boss Herbert Hainer, who bought Reebok in 2005, after activist shareholders took stakes in Adidas, and after several investors called on the company to sell more non-core businesses.
Birch Hill will pay most of the purchase price for CCM in cash and the rest in the form of a secured note, Adidas said on Thursday.
The sale will have a high double-digit million euro impact on its profit from discontinued operations in the second quarter but does not change its full-year guidance, said Adidas, which is due to publish quarterly results on August 3.
Robert W. Baird & Co acted as financial advisor to Adidas, and Stikeman Elliott LLP served as lead legal counsel.
Update: Based in Montréal, CCM is a designer, manufacturer and marketer of ice hockey equipment and related apparel. It has operations in Canada, the United States and Europe. The company was acquired by Reebok in 2004.
In a separate release, Pierre Schuurmans, COO and partner at Birch Hill, said his firm “is excited to build on CCM Hockey’s legacy as an iconic Canadian brand.”
Toronto-based Birch Hill invests in mid-market companies primarily located in Canada. It is currently investing from Birch Hill Equity Partners V, which raised $1.3 billion last year.
(Reporting by Maria Sheahan; Editing by Victoria Bryan and Elaine Hardcastle)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of CCM