Last Updated on Monday, 14 May 2012 22:26
Monday, 14 May 2012 18:37
TORONTO - Canadian specialty retailer Golf Town is expanding south of the border by acquiring Golfsmith International Holdings Inc. (Nasdaq:GOLF), a similar U.S.-based chain, in a deal valued at almost US$100 million.
Golf Town will pay US$6.10 per share in cash, or about US$96.8 million, to acquire the 85-location golf equipment and clothing retailer.
The friendly takeover offer is 30 per cent above Golfsmith's stock price at the close of trading on Friday and about 55 per cent above where the shares were when Golfsmith announced on March 1 it was seeking strategic alternatives.
Golfsmith shares were up $1.33, or 28.24 per cent, at US$6.04 Monday morning on the Nasdaq. Golf Town is owned by OMERS Private Equity, which manages funds for Ontario public-sector employees.
The Toronto-based retailer currently has 54 stores across Canada and seven in the Boston area and says the takeover of the U.S.-based concern will create the world's largest specialty golf retailer.
"Golfsmith is a company that we have admired for years," said Don Morrison, senior managing director and Canadian country head of OMERS Private Equity.
"This transaction will give us a formidable footprint in North America and will also provide a strong platform for future growth," Morrison said.
Golfsmith CEO Martin Hanaka will take over from Golf Town CEO Ron Hornbaker as chief executive of the combined company after the deal closes, likely in the third quarter.
"We hold Golf Town in the highest regard and believe them to be an ideal partner to take Golfsmith to the next stage of growth," Hanaka said.
Sue Gove, Golfsmith's chief operating officer and chief financial officer, will become president and COO of the combined company, while Hornbaker will assume the role of executive vice-president, stores.
The boards of both companies have approved the transaction. In Golfsmith's case, approval involved company officers collectively holding a majority of the company's outstanding shares and the transaction is not subject to further Golfsmith stockholder approval.
OMERS Private Equity manages more than $6.3 billion in private equity on behalf of the Ontario Municipal Employees Retirement System, which is one of Canada's largest pension funds with some 420,000 members and more than $455 billion in net assets.
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