ClubCorp, The World Leader in Private Clubs® announces that it has signed an agreement to acquire Atlanta-based Sequoia Golf which will expand ClubCorp’s industry-leading portfolio of private clubs to 209 from 159 today.
The company states that this will make ClubCorp’s portfolio of owned and operated clubs nearly five times the size of its next largest competitor.
Sequoia Golf, founded in 2002 by Joe Guerra, an industry leader, in partnership with Parthenon Capital Partners, owns and operates 50 clubs with significant concentrations in Atlanta and Houston and positions in Denver and Chicago markets. The Sequoia Golf portfolio consists of 30 owned, three leased and 17 managed properties.
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. 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 acquisition of Sequoia Golf will enhance the value of ClubCorp’s O.N.E. (Optimal Network Experiences) offering to new and participating members. The addition of Sequoia Golf’s properties will meaningfully enhance ClubCorp’s O.N.E. offering to participating ClubCorp members who already enjoy home club, community and world network benefits. This acquisition will also provide the option to introduce the O.N.E. product to Sequoia Golf members.
ClubCorp will pay $265 million for Sequoia Golf before anticipated transaction expenses. 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.
Eric Affeldt, ClubCorp’s president and CEO said, “We are thrilled to combine our industry-leading collection of clubs with Sequoia Golf. Our combined membership base will benefit from an unmatched opportunity for reciprocal usage. We believe that geographic clustering improves operational efficiencies, drives club utilization, increases options available to our members and enhances the value of ClubCorp’s O.N.E. offering.”
Mr. Affeldt also commented, “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. Sequoia Golf will strengthen and expand our cluster strategy to familiar markets, and give us a portfolio that stands to benefit from additional revenue and adjusted EBITDA growth through reinvention. 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.”
Joe Guerra, Sequoia Golf president and CEO said, “ClubCorp is the best fit for our members, employees and partners and the right evolution of our portfolio into a strong network of clubs.” Guerra, who will serve as a senior advisor to ClubCorp added, “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.”
Sequoia Golf www.sequoiagolf.com