Six years ago this month, Wind Point Partners acquired Bushnell Performance Optics through a recapitalization of its parent company, Worldwide Sports & Recreation. Since then, the Southfield, Mich.-based private equity firm has been leading a growth campaign for the sports optics supplier that has netted a total of four add-on transactions, and they’re not done yet. Still aiming to add value to the platform, Wind Point recently agreed to acquire hunting and shooting accessories manufacturer Michaels of Oregon Co.-Bushnell’s fifth add-on.
Based in Oregon City, Ore., Michaels sells accessories, such as holsters, scope covers and cleaning products under well-known industry names like Uncle Mike’s, Hoppe’s, Butler Creek and Blackwater Gear. The company earns approximately $60 million in revenues.
Overland Park, Kan.-based Bushnell, on the other hand, is best known for optical products such as binoculars, riflescopes, night vision products and laser range finders. The company, which takes in about $270 million in revenues, reportedly controls about 56% of the U.S. binocular market.
“Michaels is a great fit with Bushnell,” said Paul Peterson, a partner at Wind Point. “Both companies sell to many of the same customers like Wal-Mart, Cabela’s, Gander Mountain and Bass Pro Shops. Also, the hunting and shooting sports markets represent the key makeup of end-users for both companies.”
Combining the two businesses also creates opportunities for each company to leverage its core strengths to benefit the other, Peterson said. Bushnell is a global business and has a strong customer base in Europe, which will prove helpful in spreading Michaels’ products overseas. On the flip side, Michaels’ product line generates strong sales to the law enforcement sector, a market Bushnell currently has no penetration in.
“Hunting and shooting sports have seen some nice growth in the recent years,” as they are being marketed to a wider audience, including women and younger enthusiasts, Peterson said. “But with the increased spending on security, right now law enforcement is a higher growth category than sporting goods, which is another reason [Michaels] was attractive to us.”
With this macroeconomic trend in mind, Michaels recently unveiled Blackwater Gear, a new brand that caters to the tactical market and provides products such as belts and vests for the military and Special Forces sectors. “We’re optimistic that [Blackwater] will bring good growth to the combined company, as well.”
Antares was tapped to lead a refinancing of Bushnell, the proceeds of which will partially be used to fund the add-on. Wind Point will cover the remaining portion of the deal’s cost with equity, Peterson said.
Upon completion of the transaction, expected later this month, Bushnell’s combined revenues will climb to about $330 million. Peterson said that while the acquisition of Michaels will add “substantial growth potential” that strategics and other financial buyers may find appealing, Wind Point is not looking to let go of Bushnell just yet. “We think there are some nice near-term opportunities to create value in the combined company, so there are no near-term plans to exit [Bushnell] at this point,” Peterson said.