TORONTO (Reuters) - Ice-hockey and lacrosse equipment maker Bauer Performance Sports Ltd BAU.TO said on Wednesday it will buy Cascade Helmets Holdings, a privately held U.S. maker of lacrosse helmets, for $64 million cash.
The deal, expected to close later this month, will also give Bauer - the world’s biggest maker of hockey gear - control of Cascade’s recently established hockey helmet business.
Bauer, which is credited with creating the modern hockey skate, said Cascade’s M11 helmet, which was co-developed with former National Hockey League star Mark Messier, has been well received.
“The acquisition of Cascade increases our presence in North America’s fastest-growing team sport (lacrosse), and allows us to expand our product offering in our core hockey business,” Bauer Chief Executive Kevin Davis said in a statement.
Bauer said it expects the acquisition to immediately add to its bottom line as Cascade’s profit margins are about twice as large as its own. Bauer’s shares closed 6 Canadian cents higher at C$8.06 on the Toronto Stock Exchange on Wednesday.
Founded in Kitchener, Ontario, Bauer developed the first skate with a blade attached to the boot, an innovation credited with changing the game of hockey. The company, which dates back to the 1920s, was owned for about a decade by U.S. sporting goods giant Nike Inc (NKE.N) before being sold to private equity firm Kohlberg & Co in 2008. It was taken public via an initial public offering in 2011.
Bauer plans to use Cascade’s head-protection technologies and build on its partnership with Messier to improve player safety through product-development and awareness initiatives, the company said.
The company plans to expand its manufacturing capabilities for lacrosse and hockey helmets by also producing Bauer-branded hockey helmets at Cascade’s existing facility in Liverpool, New York.
A slew of concussions in the National Hockey League this year has shone a spotlight on injury concerns in the sport. With many of the game’s best players, including Pittsburgh Penguins captain Sidney Crosby, sidelined by concussions.
The injuries have led to an increased focus on better safety equipment and Bauer said it has made it one of its goals to acquire rival companies with innovative products that have the potential to become leaders in their categories.
The acquisition of Cascade expands Bauer’s presence in the lacrosse equipment industry by adding the industry’s premier line of helmets to its Maverik family of sticks, heads, shafts and protective gear, Bauer said.
The acquisition will be funded through the issue of about C$30 million in new equity and about $34 million in borrowing.
Bauer said it has entered into an agreement with a syndicate of underwriters, led by RBC Capital Markets, under which the underwriters have agreed to buy 3.2 million shares of Bauer for sale to the public at a price of C$7.80 per share for gross proceeds of about C$25 million.
It has also entered into a subscription agreement with funds managed by Kohlberg Management, Bauer’s majority shareholder. The funds, in a concurrent private placement, have agreed to buy 642,000 shares at the same price as those sold under the public offering. This will raise net proceeds of about C$5 million, the company said.
Bauer said it has also received a commitment from its existing lending syndicate to make available an upsized credit facility of about $275 million, thereby providing additional borrowing capacity in support of the deal. Bauer said its credit facility matures in March 2016.
Reporting By Euan Rocha; Editing by Peter Galloway