Callaway Golf acquires OGIO International for $75.5M in cash
Callaway Golf announced it has acquired OGIO International, Inc. for $75.5M in an all-cash transaction, subject to a working capital adjustment. The acquisition enhances Callaway's presence in golf while also providing a platform for future growth in the lifestyle category. Excluding non-recurring transaction and transition expenses, Callaway's management expects the acquisition to be immediately accretive to earnings. Callaway projects the acquired business will generate annual EBITDA of approximately $10M after the acquisition is integrated and the majority of operational synergies are realized. Callaway estimates that the majority of the operational synergies will be realized within two years. The purchase price values OGIO at a multiple of approximately 7.6x this projected EBITDA. Callaway also expects to realize significant value from potential tax benefits associated with the transaction. In 2017, OGIO is expected to contribute to Callaway approximately $45M in revenue. After absorbing non-recurring transaction and transition expenses of approximately $7M, OGIO is expected to be dilutive by approximately 2c to Callaway's 2017 earnings per share but is expected to be accretive thereafter.