Apollo to acquire Club Corp for $2.2 billion

John Beckert, Chairman of ClubCorp

ClubCorp announced July 9th that it would sell all outstanding shares to Apollo Global Management for $1.1 billion, or 30.7 percent more than ClubCorp's closing stock price. The transaction also included the assumption of $1.1 billion in debt, bringing the total transaction to $2.2 billion. 

ClubCorp has spent much of the past year looking at its options, as some investors have been unhappy with the financial performance of the golf management company. But the move comes as a surprise, as the Dallas-based company had announced in April that it had not received a purchase proposal for the entire company. At the time, John Beckert, Chairman of the Board for ClubCorp, said the company would continue to consider "all available alternatives to enhance value for shareholders."

In May, ClubCorp reached a settlement with activist investor FrontFour Capital Group to add two independent directors to its board. FrontFour had called for exploring several options, including a sale, and ClubCorp continued to work with Jefferies Group and Wells Fargo & Co. to evaluate options. 

ClubCorp finished fiscal year 2016 with record revenue and EBITDA and its sixth consecutive year of growth. It has increased revenue by one-third over the last four years, turning a $41 million loss in 2013 into a $3.6 million profit last year. But its had to invest a lot of money to do that — spending $690 million to "reinvent" its clubs. It has also acquired more than 56 golf and country clubs for a total of over $400 million since 2010. 

Apollo will acquire all outstanding shares of ClubCorp for $17.12 per share in the all-cash transaction. The deal is expected to close in the fourth quarter of this year. The sale will represent the end of the company's four-year run as a public company, the only golf management company to be public. KSL Capital, another private equity firm, took it public in 2013. 

The ClubCorp Board of Directors unanimously approved the agreement to sell. 

“We are pleased to reach this agreement with the Apollo funds, which follows a comprehensive review of strategic alternatives by ClubCorp’s Board of Directors,” Beckert said. “With the support of the Apollo funds, we are confident that ClubCorp will be able to continue building on its success by providing its members with unrivalled experiences at its clubs."

Apollo is a global alternative investment manager with assets under management of approximately $197 billion in private equity, credit and real estate funds invested across a core group of nine industries. It previously owned Meadowbrook Golf Group, which it had acquired in the late 1990s. While it owned Meadowbrook, it acquired KSL Fairways Golf Corp in 1999, which at that time owned 24 golf properties.  

It currently owns a handful of notable companies in the hospitality industry, including Diamond Resorts International, which is acquired in June 2016. It also owns Harrah's Entertainment, Chuch E. Cheese, and Great Wolf Resorts. ClubCorp will be its first foray into a membership-based industry. 

“We are excited for our funds to be acquiring ClubCorp,” said David Sambur, Senior Partner at Apollo. “We look forward to working with ClubCorp’s outstanding management team and talented employees, who have built a best-in-class member-centric business that delivers exceptional experiences. We plan to leverage Apollo's resources and expertise while working with ClubCorp’s dedicated team to continue to grow the business and provide the highest level of service and club offerings to members."

Apollo invested more money last year than in its history, much of it to acquire public companies. This has included ADT Corp., Fresh Market Inc., Outerwall Inc., Rackspace Hosting Inc., and West Corp., which is agreed to buy in May for $5.1 billion. 

The ClubCorp Board of Directors declared a one-time quarterly dividend of $0.13 per share of common stock. The dividend is expected to be paid on July 28, 2017, to shareholders of record at the close of business on July 21, 2017.

Financing is being provided by Citigroup, Royal Bank of Canada, Barclays, Credit Suisse and Deutsche Bank. Citigroup is acting as lead financial advisor to Apollo, and other financial advisors include RBC Capital Markets, LLC, Barclays, Credit Suisse and Deutsche Bank. 

 

 

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