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With one mammoth deal announced this morning, the cooler market grew more competitive and an overseas company signaled that it’s coming after outdoor market share in the U.S.
The publicly traded Swedish outdoor company Dometic Group AB on Friday announced it has agreed to acquire Igloo Products Corp. from private equity firm ACON Investments for $677 million.
Dometic, whose core business is accessory manufacturing for mobile-living end markets such as campers and RVs, said adding Igloo “will significantly strengthen Dometic’s offering and distribution network for the outdoor market in North America.”
“I am excited to welcome Igloo and its employees to Dometic,” said Juan Vargues, Dometic’s president and CEO. “This acquisition is in line with our strategy to position Dometic as a more consumer-driven, less cyclical company in the fast-growing outdoor business. North America is the largest market for cooling boxes and outdoor products, and with Igloo’s strong brand recognition, consumer knowledge, and local manufacturing capabilities, we are getting the necessary tools to further drive our sales and margin expansion.”
With the acquisition, Dometic adds a strong player in the cooler category to its portfolio. For the previous 12 months, Igloo posted net sales of $401 million—representing 24 percent growth from the year before amid the outdoor product boom—and an EBITDA margin of 10.1 percent.
Dometic expects the deal to close in the fourth quarter of this year and to be accretive to Dometic’s earnings per share in 2022. It also expects EBITDA growth of $50 million within five years.
“Igloo has shown strong sales growth, market share gains, and margin improvements in recent years, driven by both commercial and operational initiatives,” Vargues said. “Further sales and cost synergy activities will be implemented to generate continued improvements.”
Fight for market share intensifies
Igloo, owned by ACON since 2014, has been a prominent name in the U.S. cooler market since its founding in 1947. It employs 1,100 and is based in Katy, Texas, where it also manufactures—an operational setup that gives the company “cost benefits, flexibility, and short lead-times for the North American market,” according to Dometic’s depiction of its newest asset.
Ninety-two percent of Igloo’s net sales are in the U.S., and the company’s products are in more than 90,000 retail stores globally, though it also has a “fast-growing direct-to-consumer sales channel,” Dometic noted.
In the coming years, investors will likely look for Igloo’s business to scale up dramatically with the backing of Dometic, a company whose 2020 annual revenue was SEK 16.2 million (US$1.9 billion) and whose market cap is $5.8 billion.
“I am extremely proud of everyone on our team who has worked so hard in building Igloo into an iconic American brand,” said Dave Allen, president and CEO of Igloo Products Corp. “As part of the Dometic Group, we look forward to combining our resources in order to accelerate innovation and growth across the globe.”
What does the deal mean for the cooler category more broadly? According to Dometic, citing research from MarketsandMarkets and EMR, the global market for coolers and drinkware is a “growing $8 billion market fueled by the outdoor trends visible across the world. Igloo has a clear number-one position in this market in the U.S. Combined with Dometic’s global presence and product offering of both active and passive cooling boxes, drinkware, and fast-growing range of other outdoor products, the acquisition is expected to create a strong base to further grow in the outdoor segment.”
The newly formed cooler juggernaut will fight for share with several other brands, including YETI Inc., another public company whose 2020 sales totaled $1.1 billion and whose current market cap is $8.7 billion. Coleman is another player in the space with the backing of a large parent company—Newell Brands Inc. And the cooler brand ORCA traded hands last year after being snapped up by PE firm MacNeill Pride Group. But despite the presence of these big players, the category remains largely fragmented, leaving plenty of opportunities for disruptors to emerge and consolidation to escalate.
More deals in store for the industry?
The market-shifting acquisition is yet another example of increasing M&A activity across the outdoor space.
As OBJ has tracked in recent months, PE firms, public companies, and privately held businesses have grown through acquisition and indicated that they’re targeting additional assets for their outdoor portfolios.
Some sellers—especially those in red-hot categories like roof racks and e-bikes—are finding that their valuations have increased and that buyers are willing to pay lofty multiples to leverage the growing consumer demand.
Dometic’s acquisition of Igloo is the latest transaction in what has been a busy few months for outdoor M&A. Here are some of the deals that OBJ has reported.
- Mammut sold to British private equity firm
- GCI Outdoor acquired by portfolio company MacNeill Pride Group
- Hydration brand Nuun acquired by Néstle Health Science
- Vista Outdoor acquires two companies, including an e-bike brand
- Behind the Deal: Clarus racks up another ‘superfan’ brand
- Superfeet acquired by private equity firm
- Outdoor brand Klymit acquired by MacNeill Pride Group
- A new owner for Kokatat
- Solo Stove acquires Chubbies Shorts, rounding out new ‘Solo Brands’ portfolio
- Exclusive: Travis Campbell acquires Eagle Creek
Dometic itself has been on an M&A spree in 2021 with eight deals to date, including the May acquisition of Front Runner Vehicle Outfitters, a provider of roof racks, storage solutions, and camping gear for the vehicle-based outdoor market. Though not an acquisition, Dometic’s decision in April to enter the drinkware category is another big market move for the company.
Could more cooler and outdoor acquisitions be in the works for Dometic? It sounds likely, according to Vargues.
“Our strategy for profitable expansion is built on a combination of organic and acquisitive growth,” he said. “This is our eighth acquisition this year and our pipeline of potential future acquisitions remains strong.”
Dometic’s shares on Nasdaq Stockholm (STO: DOM) increased about 1 percent following Friday’s announcement. Outside Business Journal will begin tracking Dometic in the OBJ Outdoor Index.