Clarus Corp., the Utah-based parent company of Black Diamond, Sierra Bullets and Pieps, among others, reports that it has entered into a definitive agreement to acquire Australia-based Rhino-Rack Pty Ltd, a manufacturer and distributor of roof racks, mounting systems, luggage boxes, carriers and other automotive accessories, for a total purchase price of approximately $198 million (AUS$255m). The purchase price comprises $150 million (AUS$194m) in cash and approximately 2.3 million shares of Clarus common stock, calculated in accordance with the terms of the purchase agreement.
Richard Cropley, Rhino-Rack’s chief executive who founded the company in 1992, is expected to be one of Clarus’ five largest shareholders upon closing of the transaction. In addition, an earn-out of $8 million (AUS$10m) is payable in cash on July 31, 2022, contingent upon the achievement of a specified revenue target. The company expects the cash payment to be funded by an increase in the company’s existing credit facility led by J.P. Morgan.
The acquisition of Rhino-Rack is expected to be accretive to Clarus immediately upon closing. For the twelve-month period ending March 31, 2021, Rhino-Rack generated net sales of approximately $90 million (AUS$115m) and adjusted Ebitda of approximately $16.7 million (AUS$21.5m). Approximately 80 percent of Rhino-Rack’s revenue derived from Australia and New Zealand and 20 percent from North America.
The transaction is expected to close in July 2021, subject to customary closing conditions and certain regulatory approvals in New Zealand. Upon completing the transaction, Rhino-Rack’s management team will continue to manage the company from Rhino-Rack’s headquarters in Sydney, Australia. Clarus will provide further information on the Rhino-Rack transaction in conjunction with its second-quarter conference call, which is expected to be held in August 2021.