Bushnell Outdoor Products, an Overland Park, Kan.-based maker of binoculars, telescopes and related outdoor optics, is scoping its industry for acquisitions this year, said chief executive Blake Lipham.
The MidOcean Partners LP portfolio company is eyeing acquisitions of intellectual property ranging in value from $5 million to $10 million as well as larger, transformational deals of $200 million to $300 million.
Bushnell is targeting companies in the hunting and shooting accessories categories, as well as companies that make products for the outdoor retail channel and businesses that would shore up the company's eyewear division.
Bushnell is seeking acquisitions that are synergistic in terms of distribution and sales, would contribute to the company's topline, or fill gaps in the company's product portfolio. The company would finance a deal with cash or through a combination of debt and equity, Lipham said.
The outdoor optics market is highly fragmented, providing Bushnell with ample opportunity to make bolt-on acquisitions, Lipham said. Though Bushnell declined to comment on potential purchases, likely targets could include Beaverton, Ore.-based sporting goods optics company Leupold & Stevens Inc., which reportedly has between $150 million and $250 million in revenue; or German based Leica Camera AG, which had €249 million ($327 million) in sales last year.
Lipham noted that as larger sporting goods retailers consolidate, they desire to reduce the number of vendors they work with.
Several notable sporting goods retailers have combined over the past decade. In 2003, Sports Authority Inc. merged with Gart Sports Co. in a $683 million deal. Dick's Sporting Goods Inc. bought Golf Galaxy Inc. in 2006 for $225 million. Private equity firms have been scooping up sporting goods chains as well, with Leonard Green & Partners LP buying Sports Authority in 2006 for $1.3 billion and Kohlberg Kravis Roberts & Co. LP purchasing a majority stake in Academy Ltd.'s Academy Sports + Outdoors last year for $2.3 billion.
David Basto, a managing director with MidOcean, said his firm invested in Bushnell as a platform company that could be built with acquisitions. MidOcean acquired Bushnell from Wind Point Partners in 2007 for between $500 million and $600 million.
Bushnell's most recent acquisitions include its $7 million purchase of Simmons Outdoor Corp. from Meade Instruments Corp. in June 2008, and its August 2011 deal for Night Optics USA Inc. for undisclosed terms.
Basto characterized Bushnell as a company that has customer and product diversity, with a sports enthusiast element that gives it a certain resilience during recessions. MidOcean, he said, is a "big believer" in the outdoor active lifestyle space.
Bushnell generates about $450 million in revenue, but Lipham otherwise declined to comment on Bushnell's financials. About 58% of the company's revenue is generated domestically.
Bushnell grew organically by about 10% in its last fiscal year, which was calendar 2011. The company projects a 10% growth rate for this year too, according to Lipham.
Basto said Bushnell is large enough to be a publicly held entity, but MidOcean has not yet made a decision on when or on how to exit the investment.
Bushnell sells its products at Internet retailer Amazon.com Inc., as well as at sporting goods chains such as Big 5 Sporting Goods Corp., Academy Sports + Outdoors, Cabela's Inc., and in big-box department stores such as Wal-Mart Stores Inc.
Both Basto and Lipham predict increased dealmaking in the outdoor sporting goods space generally over the next 12 to 18 months, which, although very fragmented, continues to generate interest.
Bushnell's brands and products include Bushnell, Bollé, Bushnell Golf, Butler Creek, Final Approach, Hoppe's, Millett Sights, Serengeti, Simmons Optics, Stoney Point, Tasco, Uncle Mike's and Uncle Mike's Law Enforcement.