The $265 million deal will add 50 properties to the Dallas-based company’s portfolio of private clubs.
ClubCorp today announced it has signed an agreement to acquire the Atlanta-based Sequoia Golf for $265 million.
The acquisition of Sequoia Golf will expand ClubCorp’s portfolio of private clubs to 209 from 159 today, making ClubCorp’s portfolio of owned and operated clubs nearly five times the size of its next largest competitor.
Sequoia Golf was created by Joe Guerra, President and CEO, and its founding partner Parthenon Capital, which has worked with the company since its inception. Launched in 2003, Sequoia acquired the original seven Canongate properties in south Atlanta for approximately $55 million from the Patten Seed Company that was controlled by the Roquemore family. Since then, Sequoia has grown to include 50 owned and leased golf and country clubs, and managed clubs throughout the U.S.
The addition of Sequoia Golf will increase ClubCorp’s golf and country club portfolio to 157 from 108 today, and raises ClubCorp’s business, sports and alumni clubs by one to 52. Sequoia Golf will also add over 7,000 acres of fee simple real estate and over 27,000 memberships. Combined, ClubCorp will own over 25,000 acres of fee simple real estate and have approximately 180,000 individual memberships serving more than 430,000 members.
The acquisition of Sequoia Golf will further increase ClubCorp’s industry-leading economies of scale and will drive additional procurement, operational and other cost efficiencies. Today, Sequoia Golf generates LTM adjusted EBITDA of $24.4 million post corporate expenses. With anticipated annualized cost synergies, Sequoia Golf’s pro forma annual adjusted EBITDA is approximately $29 million to $30 million.
ClubCorp believes that Sequoia Golf’s collection of owned and operated private clubs will respond well to reinvention. Since 2007, ClubCorp has invested more than $400 million of maintenance and expansion capital to better position its clubs in their respective markets.
“We are thrilled to combine our industry-leading collection of clubs with Sequoia Golf,” said ClubCorp CEO Eric Affeldt. “Sequoia Golf aligns perfectly with our business model. It is a strong membership business that, like ours, generates nearly 50% of its revenue from membership dues. This acquisition adds shareholder value and is expected to be accretive in year one. Adding Sequoia Golf’s portfolio of clubs bodes well for our business, and builds an increasingly powerful and more meaningful ClubCorp brand.”
Affeldt is speaking with media outlets today, and C&RB will feature a follow-up report in tomorrow’s news.
ClubCorp intends to invest non-recurring expansion capital in the first two years following this acquisition on reinvention projects to improve golf course and practice facilities, newly create or update indoor and outdoor dining and social gathering facilities, and add family-friendly pool amenities and enhance fitness facilities.
The acquisition of Sequoia Golf will expand ClubCorp’s geographic cluster strategy and increase ClubCorp’s density in two affluent and expanding key markets. In Atlanta, ClubCorp’s collection of clubs will increase to 35 from eight today. Similarly, ClubCorp’s presence in the Houston market will expand to 19 from 12 clubs today. This acquisition will also introduce ClubCorp into the Denver and Chicago golf markets, and adds a geographically diverse property management platform.
The deal provides Sequoia with increased capital to modernize its properties and resources to offer more robust programming and services to its members and their families. It also creates a highly competitive growth platform and access to acquisition opportunities for the company.
ClubCorp intends to finance this acquisition through existing liquidity and incremental term loan proceeds. ClubCorp does not anticipate issuing any additional equity to close this transaction. The transaction is subject to customary closing conditions, and is expected to close during ClubCorp’s fiscal fourth quarter.
“ClubCorp is the best fit for our members, employees and partners and the right evolution of our portfolio into a strong network of clubs,” said Guerra, who will serve as a senior advisor to ClubCorp. “The leadership that ClubCorp has provided in its club reinventions, adding member amenities, developing its O.N.E. product offering and growth via acquisitions is a tremendous model for the club industry.”
Tell Us What You Think!
You must be logged in to post a comment.