The vision of a marathon runner or tour bicyclist splashing water on their faces as they run or ride by the camera is somehow synonymous with the dedication it takes to participate in those sports. “No time to drink, I’ll just splash it up against my face and take what goes in” is the message sent by these pictures, seemingly ascetic to those of us on the sidelines sipping coffee. However, in two sports without much room for innovation, CamelBak’s hands-free hydration-system backpacks are threatening to take those pictures and file them alongside the helmetless hockey players or the smoky basketball arenas in the ESPN Classic archives.
At least this is what Bear Stearns Merchant Banking is hoping for, having acquired CamelBak in a $210 million deal that is set to close at the end of this month. CamelBak is tapped into the running, biking and skiing markets, in addition to military and industrial sectors. But the company is relatively obscure to most people outside of those arenas. The product resembles a slim backpack outfitted with a tube that reaches to a person’s mouth.
“I had looked at CamelBak as more of mountain bike product, I had no idea they were as big in the government and military as they are,” said Bear Stearns Senior Managing Director and Principal Bodil M. Arlander, who was familiar with the product because she is an avid tri-athlete. “There are definitely a lot of things we can look at-be it new end markets, new applications, new lines, etcetera. The challenge here will be to prioritize which opportunity to pursue first.”
To purchase CamelBak, Bear Stearns contributed $90 million of equity, with the balance of the $210 million coming from an $80 million senior debt package from Bank of New York and BNP Paribas and a $40 million subordinated debt provision from American Capital Strategies.
From the seller’s side, The Bowes Family will be seeing quite a return on its investment, having acquired the business for just $4 million in 1995. “The business has grown about 20 times since we bought it, in excess of over 30% a year,” said family member John Bowes. “When we acquired CamelBak, it was just mountain bikers who were using [the product]. We moved it into the backpacking and skiing markets, then we got into the government and military space. The boarder patrol, customs agents, troops in the Middle East, they’re all using this now, and it’s started to penetrate the industrial arena as well.”
Going forward, Arlander said Bear Stearns will look to expand CamelBak’s reach in the international markets, and currently has a line designed exclusively for women in the works. She does not expect add-on acquisitions to be a central theme in building the business, although she said if the opportunity presented itself, Bear would be open to buying businesses that offer auxiliary products as a way to leverage the CamelBak brand.
Bear used its $1.5 billion Bear Stearns Merchant Banking Fund II for the acquisition. The firm has been busy in November, also finalizing an add-on deal for its Reddy Ice platform, which it owns in partnership with Trimaran Capital Partners.
The Bowes family, meanwhile, is not a familiar face in LBO circles, but the group has seen some success investing in buyouts in the past. In addition to CamelBak, the family purchased and sold automobile roof-rack maker Yakima, a sale that reportedly generated $91 million in proceeds. The family also founded and owned Kransco, a toy company known for its Whammo line, Power Wheels and swimming pool lounge floats, which was sold to Mattel in 1994.