KKR Buys Varsity Brands from Bain Capital in Strategic $4.75 Billion Deal

Private equity giant KKR has made a strategic move by acquiring Varsity Brands from Bain Capital for a substantial $4.75 billion. This acquisition is poised to expand KKR's portfolio into the lucrative sports uniform and school yearbook industries, heralding new growth opportunities in these stable sectors.

Details of the Acquisition

KKR & Co. (NYSE: KKR) has entered into an agreement to acquire Varsity Brands, a prominent U.S. maker of sports uniforms and school yearbooks. The deal, valued at approximately $4.75 billion, including debt, will be facilitated through KKR's Americas private equity fund. Confidential sources have indicated that KKR plans to offer equity to all employees of Varsity Brands, extending a benefit traditionally reserved for senior executives to rank-and-file employees.

About Varsity Brands

Varsity Brands is a well-known entity in the sports and educational industries, consisting of two main businesses: BSN SPORTS and Varsity Spirit.

BSN SPORTS

BSN SPORTS is a leading distributor of customizable team sports equipment and apparel. They partner with prominent brands like Nike and Under Armour, providing a wide range of products to various sports teams.

Varsity Spirit

Varsity Spirit is famed for its cheerleader uniforms and apparel. It not only supplies these items but also organizes educational camps, clinics, and competitions. Varsity Spirit further includes the production of school yearbooks, a division retained during a previous sale of their Herff Jones graduation merchandise unit to Atlas Holdings.

Background of Bain Capital and Varsity Brands

Bain Capital acquired Varsity Brands in 2018 for around $2.5 billion from private equity firms Charlesbank Capital Partners and Partners Group. According to Reuters, Bain Capital had considered selling or initiating a public offering for Varsity Brands in the past year. The sale to KKR now finalizes this strategic consideration.

Industry Impact and Strategic Investment

The acquisition of Varsity Brands by KKR comes at a time when private equity firms are increasingly targeting the sports apparel industry. The sector is attractive due to its predictable cash flows and consistent demand, which provide steady returns to investors.

Additionally, other notable activities within the industry include ACON Investments preparing to list New Era Cap, a prominent U.S. sports league headwear company, on the stock market, and Platinum Equity's acquisition of Augusta Sportswear and Founder Sport Group earlier this year.

The Future for KKR and Varsity Brands

With this significant acquisition, KKR is poised to enhance its footprint in the sports and educational sectors. By offering equity incentives to all employees, KKR aims to boost morale and productivity within Varsity Brands, fostering a more inclusive corporate culture. This move also aligns with KKR's broader strategy of making strategic investments that yield steady and reliable returns.