CCM Hockey chief executive officer Marrouane Nabih, left, and Andreas Källström Säfweräng, Partner at Altor Equity Partners, sit at CCM's head office in Montreal on Oct. 1. Altor has outbid several rivals to acquire CCM from Birch Hill Equity Partners,Supplied
Swedish asset manager Altor Equity Partners has won a hotly contested battle for CCM Hockey, buying the country’s oldest hockey equipment maker for $600-million including debt as part of a strategy to grow the game among women and first-generation immigrants to North America and Europe.
Stockholm-based Altor, owner of ski maker Rossignol Group, outbid several rival private equity funds and sports companies to acquire CCM from Birch Hill Equity Partners, which bought the company in 2017 from German shoe giant Adidas AG.
Montreal-based CCM has been making hockey sticks, pads and skates for more than a century and holds approximately 35 per cent of the global market. Toronto-based Birch Hill put the company on the auction block this spring, and its bankers called the sales process “Project Rocket,” in tribute to Montreal Canadiens legend Maurice (Rocket) Richard.
In an interview about the deal, set to be announced Wednesday, Altor partner Andreas Källström Säfweräng said the fund manager plans to invest in CCM’s marketing and product development to attract more female players, along with kids whose parents immigrated from countries without hockey rinks.
“We know the CCM brand is far larger than its top line sales,” said Mr. Källström Säfweräng, who oversees Altor’s investments in consumer product companies. The father of four hockey-playing children said that, over time, CCM may expand its offerings into sectors such as apparel, a successful strategy at Rossignol, which now sells shoes and clothing along with skis.
CCM management will take a significant ownership stake in the company, alongside Altor, and the company’s head office will remain in Montreal. In an interview, CCM chief executive Marrouane Nabih said strong interest in the company from potential buyers reflected rising sales of products developed under Birch Hill’s ownership.
“We did the R&D to design equipment meant for a woman’s physiology, so a girl embracing hockey wasn’t forced to wear gear meant for her brother,” Mr. Nabih said. Professional Women’s Hockey League star Sarah Nurse sports CCM gear on the ice, as do the National Hockey League’s Auston Matthews, Connor McDavid and Sidney Crosby.
Too many players on the ice, as hockey companies CCM, Bauer and True are all in play
CCM, Altor and Birch Hill did not release financial terms of the transaction. Sources close to the process, including an unsuccessful bidder, said the CCM sale took place at a $600-million enterprise value – the company’s equity plus its debt – and provided Birch Hill with an 11-fold return on its investment. The Globe and Mail agreed not to name the sources because they were not authorized to speak for the companies.
CCM generated approximately $70-million in earnings before interest, taxes, depreciation and amortization (EBITDA) last year, and was losing money when Birch Hill acquired the company. In the 1990s, CCM became a major player in Europe’s Nordic nations by acquiring Jofa, a Swedish equipment maker, and Finland’s Koho.
The dominant hockey equipment company is Bauer Hockey LLC, with approximately 60-per-cent market share. Mr. Källström Säfweräng said one of Altor’s goals is for CCM to overtake Bauer as the No. 1 skate supplier.
On Monday, Fairfax Financial Holdings Ltd. announced a deal to take control of Bauer by acquiring the former partner Sagard Holdings Inc.’s stake in the company. Fairfax and Sagard, an arm of Power Corp. of Canada, acquired Bauer in 2017. Sagard put its interest up for sale early this summer.
A third hockey equipment maker is also on the auction block. In August, private equity fund Lincolnshire Management Inc. launched a sale process for the hockey division of True Temper, which sells skates, sticks and goalie pads. Lincolnshire bought the business in 2012.
Investment bank Raymond James Financial Inc. is advising on the True Temper sale, which the financiers called “Project Stanley” after the oldest trophy in North American pro sports. The True Temper division is relatively small, with US$53-million in sales and US$7-million in annual EBITDA, according to one of the sources. Lincolnshire seeks to sell for more than US$50-million, according to the source.
In the interview, Mr. Källström Säfweräng said Altor planned to expand CCM with organic growth initiatives and was unlikely to acquire another major hockey brand such as True Temper.
Established in 2003, Altor has invested €11-billion ($16.4-billion) in more than 100 companies. The fund manager is a familiar player in Canadian private equity.
In 2012, Altor sold a 75-per-cent stake in outdoor clothing company Helly Hansen Group AS to the Ontario Teachers’ Pension Plan for a reported US$326-million. Teachers bought the remainder of the company from Altor in 2015, then sold Helly Hansen to Canadian Tire Corp. in 2018 in a transaction with an enterprise value of $985-million.