Black Diamond Inc (BDE) is a reverse merger stock as two operating companies, Black Diamond Equipment and Gregory Backpacks, were aquired by a registered shell company Clarus Corp, that had previously sold its software operations.
In a letter to shareholders from May 2010, chairman Warren B. Kanders states:
After a long and thorough process of sourcing and reviewing potential redeployment candidates, I am pleased to say that the search has ended and a new chapter for Clarus is about to begin.
We are extremely excited that Clarus has reached agreements to acquire, in two separate transactions, Black Diamond Equipment, Ltd. and Gregory Mountain Products, Inc. Black Diamond is a leading designer and manufacturer of equipment for rock climbers, ice climbers, alpinists, and freeride skiers, while Gregory Mountain Products is a premier designer and manufacturer of technical backpacking and mountaineering products and accessories. We believe these brands create a unique platform to build a large, global, diversified company in the outdoor equipment and lifestyle markets both organically and through targeted acquisitions.
We set a high bar for the companies we considered, and I am very pleased to report that the new platform Company created through these transactions meets all of the criteria which guided our analysis throughout this process:
- An industry-leading management team with a leading market position,
- An established company with a history of strong operating and financial results and substantial free cash flow generation,
- Organic growth opportunities with favorable macro trends underlying the business,
- Significant domestic revenue coupled with broad geographic reach,
- Solid market barriers to entry, and
- Viable opportunities for targeted acquisitions and industry consolidation.
“In addition, a number of owners of Black Diamond shares, including current Black Diamond CEO Peter Metcalf, will use a portion of their cash consideration from the sale to purchase shares in Clarus at $6 per share. After the closing of transactions, the board of directors for the new company will own approximately 35 percent of the shares.”
“While relatively new to Black Diamond, Kanders is no stranger to the Gregory brand. He acquired the brand when he was at Armor Holdings in 2004. Armor was sold to BAE in 2007, but Kanders regained control of the brand as a majority shareholder in Gregory as part of the investment partnership that acquired Gregory from BAE Systems in early 2008 (Click here to read our March 27, 2008, story, “Gregory Mountain Products back in private hands following management-led purchase.”). Kanders will continue as executive chairman of the new company.”
“Though there is brand overlap, there is also significant brand distinction in the distribution platform globally. In the United States, both Gregory and Black Diamond count REI and EMS as significant retail partners. For Black Diamond, Backcountry.com is also considered a significant retail partner. However, both companies maintain that the core strength and majority of sales are realized through smaller specialty outdoor retailers. Overall, Gregory reports it is distributed through 900 retail doors, 500 of which are located in the United States. Black Diamond says it has 1,000 individual retail accounts, representing 1,500 doors globally. In addition to Black Diamond’s account base in North America and Europe, it has 24 distributors in Asia and the South Pacific, one distributor in Africa and four in South America.”
Interestingly, the majority of Gregory’s sales are currently realized through the Asian market, with the product offering there expanding into daypacks, briefcases and shoulder bags. It also owns two retail stores, one in Tokyo and the other in Seoul, South Korea.”
Black Diamond CEO, Peter Metcalf is Vice Chair of the Outdoor Industry Association