CCM hockey sticks stand in Just Hockey Toronto, a hockey equipment store, on April 15, 2024.Fred Lum/The Globe and Mail
CCM Hockey has scored a Canadian co-owner, with Northleaf Capital Partners Ltd. joining forces with CCM’s Swedish private equity backer in a bid to make the 125-year-old company the top global player in hockey gear.
In October, Stockholm-based Altor Equity Partners announced plans to acquire CCM, founded in 1899, from Toronto-based Birch Hill Equity Partners. Altor made the commitment with plans to bring in a minority Canadian partner, and chose Northleaf, a US$27-billion fund manager with numerous investments in consumer companies.
“The opportunity to buy into the iconic CCM brand and be part of its global expansion is right in the heart of our strike zone,” said Michael Flood, head of private equity at Toronto-based Northleaf. “Canadian ownership of CCM is central to the way we want to build the best brand in hockey,” Mr. Flood said In an interview on Wednesday.
Northleaf previously owned an indirect stake in Montreal-based CCM as an investor in funds run by Birch Hill, which acquired the gear maker in 2017 from German shoe giant Adidas AG for US$110-million. Northleaf and Birch Hill were both created by management-led buyouts of divisions at Toronto-Dominion Bank. Northleaf also invests in Altor’s funds.
“Northleaf is an experienced investor with a global network and deep knowledge in the local Canadian market and we’re excited to be partnering with their team,” said Andreas Källström Säfweräng, a partner at Altor. CCM sells hockey equipment in 40 countries, and Mr. Källström Säfweräng said Altor’s goal is to make CCM the top-selling hockey brand around the world.
CCM’s new owners plan to build the business by increasing sales to women, who currently account for 10 per cent of hockey players globally. CCM was the first company to launch hockey gear designed specifically for women. In an interview, CCM chief executive officer Marrouane Nabih said: “We want to build a game where 50 per cent of players are female.”
Professional Women’s Hockey League star Sarah Nurse uses CCM gear, as do Kendall Coyne-Schofield, Taylor Heise and Erin Ambrose. The National Hockey League’s Auston Matthews, Connor McDavid and Sidney Crosby also play with CCM equipment.
CCM’s growth strategy also focuses on ensuring hockey gear remains affordable. “There will always be a CCM product to fit all budgets,” Mr. Nabih said. The company’s development strategy, backed with Altor and Northleaf’s capital, includes a focus on producing lower-cost equipment.
“Part of CCM’s appeal is we sell sticks that cost $69, along with sticks that cost $399,” Mr. Nabih said. “Our success depends on attracting and retaining players.”
In North America, participation in hockey dropped after the COVID-19 pandemic. Mr. Nahih said CCM launched or sponsored a number of initiatives to get players back on the ice, including a free program called Hockey House Montreal opening later this month. The event features professional players mingling with children on an outdoor rink, and builds on programs in Boston and Toronto over the past two years.
Too many players on the ice, as hockey companies CCM, Bauer and True are all in play
Toronto-based Northleaf has a number of investments in consumer and sporting goods companies, including a leading manufacturer of baseball gear. Altor has invested €11-billion ($16.3-billion) in more than 100 companies, including ski maker Rossignol Group.
Altor’s growth strategy at Rossignol included building the company’s sports clothing business. Mr. Nabib said under its new owners, CCM plans to expand its apparel sales.
The private equity funds declined to disclose the terms of the transaction. Two sources with knowledge of the sale said Altor and Northleaf paid a total of $600-million in enterprise value – equity plus debt – which is eight times the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) last year.
Private equity firms control the hockey equipment industry. CCM has approximately 35 per cent of the market and its major rival is Bauer Hockey LLC, with a roughly 60-per-cent share.
In October, Fairfax Financial Holdings Ltd. announced a deal to take control of Bauer by acquiring Sagard Holdings Inc.’s stake. The two sources said Fairfax also paid eight times EBITDA for Bauer, and Altor looked at buying the company before purchasing CCM.
Fairfax and Sagard, an arm of Power Corp. of Canada, acquired Bauer in 2017. Sagard put its interest up for sale early last summer.
Northleaf’s investment in CCM means Montreal-based Power Corp. has traded teams in the hockey industry. In 2020, Power Corp. operating companies Mackenzie Financial Corp. and Great-West Lifeco Inc. acquired a 49-per-cent voting interest in Northleaf. The CCM transaction is Northleaf’s 150th co-investment with another private equity fund.