News – Fox Factory buys Race Face and Easton Cycling for $30.2M

by Brian Mullin on December 6, 2014

Fox Factory Holding Corp. to Acquire the Assets of the Race Face Performance and Easton Cycling Businesses

Race Face and Easton Businesses to Expand FOX’s Ride Dynamics Portfolio to Include High Performance Bicycle Wheel Category

Wow, this is some big new in the bike world. The mighty Fox Racing Shock is acquiring both Race
Face and Easton Cycling for $32 million. These companies have quite the
convoluted story. Just over three years ago Race Face dissolved when it
was close to bankruptcy, and former VP of Sales Chris Tutton (then
Director of OEM Sales for Easton Bell Sports.) brought it out of its
deathbed. In April this year Race Face bought Easton Cycling from BRG
Sports (Bell/Riddell/Giro). Fox was originally part of the monstrous
Compass Diversified Holdings until Fox was spun off in an IPO in the
summer of 2013. And now Fox buys the Race Face and Easton Cycling duo!

Tutton
said Race Face/Easton operations will remain at their current British
Columbia location with Tutton at the helm into the foreseeable future.
No changes to the operation are planned, he said (which is a good
thing).

Press Release


SCOTTS VALLEY, Calif., Dec. 5, 2014 (GLOBE NEWSWIRE)
Fox
Factory Holding Corp. (Nasdaq:FOXF) (“FOX”) today announced, that
through certain of its subsidiaries, it has entered into a definitive
agreement to acquire substantially all the assets of the Race Face and
Easton Cycling businesses, formerly Race Face Performance Products, Inc.
and 0999324 B.C. Ltd. (together “Race Face/Easton”). Race Face/Easton
designs, manufactures, and distributes high performance mountain and
road bike wheels and other high performance cycling components including
cranks, bars, stems, and seat posts, globally to OEMs and the
aftermarket.

“We are very excited about the Race Face/Easton
acquisition and look forward to welcoming their team to the FOX family,
“stated Larry L. Enterline, FOX’s Chief Executive Officer. “This
transaction demonstrates the execution of our strategic initiatives to
increase FOX’s product penetration into both existing and adjacent
product categories to help drive our bike sales and profitability long
term. We look forward to leveraging our global marketing, engineering,
distribution, and supply chain resources to collectively develop next
generation, high performance bicycle ride dynamics solutions.”

“We
believe that FOX and Race Face/Easton are a perfect fit as we
complement each other with our distinct high performance mountain bike
product lines,” said Chris Tutton, President of Race Face/Easton. “The
added operations, marketing, and engineering support from FOX will allow
us to innovate faster while remaining focused on our core businesses.”

FOX
will acquire Race Face/Easton in an asset purchase transaction for
approximately $30.2 million. The transaction was financed with debt and
includes a potential earn out opportunity of up to a maximum of $17.4
million payable over the next two fiscal years contingent upon the
achievement of certain performance based financial targets. On a
combined basis, Race Face/Easton generated approximately $23.6 million
in unaudited net sales and unaudited Adjusted EBITDA of approximately
$4.3 million in its fiscal year ended October 31, 2014. FOX expects Race
Face/Easton revenue growth in the high single digit range, and expects
to invest in Race Face/Easton to strengthen its infrastructure and
maximize the long term potential of the business. The Company plans to
provide 2015 guidance along with its fourth quarter and fiscal 2014
earnings announcement. The Company anticipates the transaction to close
by the end of 2014.

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