TIDMBOWL
RNS Number : 6538M
Hollywood Bowl Group plc
25 May 2022
25(th) May 2022
Hollywood Bowl Group plc
("Hollywood Bowl" or the "Group")
Acquisition of Teaquinn Holdings Inc., a Canadian bowling
operator
Strategic purchase of a high-quality, well run ten-pin bowling
business that provides a growth platform in a new international
territory
Hollywood Bowl, is pleased to announce the acquisition of
Teaquinn Holdings Inc. ("Teaquinn"), a Canadian-based bowling
business, for a total consideration of CAD 17 million
(approximately GBP10.6 million) to be satisfied by an initial
payment of CAD 13.6 million in cash and a deferred consideration of
CAD 3.4 million (the "Acquisition").
Acquisition highlights
-- Teaquinn comprises of Splitsville, an operator of ten-pin
bowling centres and Striker Bowling Solutions, a B2B supplier and
installer of bowling equipment.
-- Splitsville is a well operated business with a high-quality
management team and a long track record of performance; operating
five large entertainment centres each with ten-pin bowling lanes,
dining, bar and amusement offers.
-- Pre-Covid, Splitsville operated four bowling centres with CAD
12.3 million revenue and CAD 2.7 million EBITDA on a pre IFRS 16
basis. A fifth centre was acquired in 2021.
-- The Acquisition will be funded from the Group's existing cash
resources and is expected to be earnings accretive for the year
ending FY2023.
-- Teaquinn's Founder and President, Pat Haggerty, will remain
with the business and be incentivised by a separate, capped, earn
out scheme which crystalises no earlier than the end of FY2025.
-- The Group believes there is significant opportunity to add
value to the existing Splitsville business and, in a highly
fragmented and underinvested market, the Group has identified a
pipeline of acquisitions as well as new site opportunities - with
returns in line with Hollywood Bowl's financial investment criteria
- and the potential to add up to 10 sites over the next five
years.
Information on Splitsville
Splitsville is made up of five large family entertainment
centres, two of which are freehold assets. All centres have ten-pin
bowling lanes, a large bar and diner and an amusements offer. As
part of the transaction Hollywood Bowl is also acquiring Striker
Bowling Solutions, a supplier and installer of bowling products and
which owns the exclusive rights to Brunswick product distribution
in Canada.
Splitsville is a well operated business with a high-quality
management team and a long track record of trading performance.
Pre-Covid it operated four bowling centres with CAD 12.3 million
revenue and CAD 2.7 million EBITDA in FY2019, with the combined
businesses generating CAD 18.7 million of revenue with an EBITDA of
CAD 3.0 million. A fifth centre was acquired in 2021. The Canadian
government adopted a strong approach to Covid restrictions and the
Splitsville business was initially closed for four months from
March 2020, before reopening with capacity and group size
restrictions for four and a half months. In mid-November 2020
another three-and-a-half-month closure period ensued, with a
seven-week reopening from March 2021 followed by a three-month
lockdown which ended 15 July 2021. A final period of reopening
started in July 2021, with capacity restrictions finally removed in
September 2021. Compulsory face coverings and proof of vaccination
restrictions were finally relaxed in early March 2022 and
Splitsville has seen strong trading since then and is currently
outperforming FY2019 comparables.
For the financial year ended 31 December 2021, Teaquinn reported
unaudited EBITDA of CAD 2.7 million and Net Income of CAD 1.9
million.
Supported by the Group, Founder and President of Teaquinn, Pat
Haggerty, will remain with the business and, together with his
management team, who are also planning to stay with the business,
will be responsible for delivering the expansion plan.
Terms of the Acquisition
Under the terms of the Acquisition, Hollywood Bowl will acquire
100% of the issued share capital of Teaquinn for a total
consideration of CAD 17 million (approximately GBP10.6 million)
from Pat Haggerty and his Family Trust. The consideration will be
satisfied by an initial payment of CAD 13.6 million in cash and a
deferred consideration of CAD 3.4 million. The deferred
consideration will be payable at the earlier of Pat Haggerty
leaving the business and the end of FY2025. There are no other
conditions on payment of this consideration.
Additionally, Pat Haggerty will be incentivised by a separate
cash-based earn out scheme which will be based on an EBITDA
multiple and the financial performance of Teaquinn. The earn-out
crystalises no earlier than the end of FY2025.
The total aggregate amount payable under the terms of the
Acquisition, including the earn-out is capped at CAD 34
million.
The Acquisition will be funded from the Group's existing cash
resources and is forecast to be earnings accretive for the year
ending FY2023 with returns in line with Hollywood Bowl's
operational and financial investment criteria.
Strategic rationale for the Acquisition
Hollywood Bowl Group believes there is significant opportunity
to add value to the existing Splitsville business through
leveraging its customer-led operating model, technology and digital
marketing experience and through increasing the scale of the
business. Whilst very well established, the Canadian bowling market
is fragmented and underinvested, and ripe for consolidation. In
addition, there are number of well populated urban areas that are
currently underserved by family entertainment offers. The Group has
an identified pipeline of new site opportunities with the potential
that at least 10 sites can be added over the next five years.
Stephen Burns, Chief Executive of Hollywood Bowl, commented:
" We are delighted to have acquired Splitsville and Striker
Bowling Solutions which marks a key milestone as we take our first
step internationally. This is a unique opportunity to acquire a
well-run business with an experienced existing management team in a
new territory where we see significant potential for sustained
profitable growth. Canada shares many similarities with the UK
bowling market and we believe there is unmet demand for well
invested, affordable, family-friendly bowling led experiences. We
are confident that Splitsville's operations and brand will provide
us with an excellent platform for further growth and that together
with Pat and his team we can continue to enhance and evolve
Splitsville's existing customer offer through our extensive indoor
leisure experience."
Pat Haggarty, Founder and President of Splitsville and Striker
Bowling Solutions , said:
"I am very excited that our business will now be part of the
Hollywood Bowl Group. We share an ambition and vision for the
long-term growth of the business and crucially, we are a great
cultural fit. Hollywood Bowl Group has led the ten-pin bowling
industry in a number of ways for many years and I am looking
forward to working with Stephen and his team and applying their
knowledge and experience to our operations in ways which will
enhance our customers experience as we grow the business."
-Ends-
Enquiries: Via Tulchan Communications
Hollywood Bowl Group PLC
Stephen Burns, Chief Executive
Officer
Laurence Keen, Chief Financial
Officer
Mat Hart, Chief Marketing and
Technology Officer
Tulchan Communications
Elizabeth Snow Hollywoodbowl@tulchangroup.com
James Macey White +44 (0)20 7353 4200
Laura Marshall
Notes to Editors:
Hollywood Bowl Group plc
Hollywood Bowl Group is the UK's largest ten-pin bowling
operator, with a high-quality portfolio of 67 centres operating
across the UK under the Hollywood Bowl, AMF and Puttstars (mini
golf) brands. The Group specialises in operating large, high
quality bowling centres, predominantly located in out-of-town
multi-use leisure parks (typically co-located with cinema and
casual dining sites) and large retail parks. The centres are
designed to offer a complete family entertainment experience with
each centre offering bowling lanes or three mini-golf courses
alongside on-site dining, licensed bars and state-of-the-art family
games arcades.
Splitsville and Striker Bowling Solutions
Splitsville operates five large entertainment centres each with
ten-pin bowling lanes, dining, bar and amusement offers.
Splitsville is a well operated business with a high-quality
management team and a long track record of performance. Striker
Bowling Solutions, a supplier and installer of bowling products and
which owns the exclusive rights to Brunswick product distribution
in Canada.
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