SBD/August 14, 2014/Finance

ClubCorp Expands Portfolio Of Golf Courses By 45% With Deal For Sequoia Golf Holdings

ClubCorp Holdings yesterday said that it will "buy smaller competitor Sequoia Golf Holdings" for $265M in a deal that will "expand ClubCorp's portfolio of golf and country clubs by roughly 45%," according to Sara Germano of the WALL STREET JOURNAL. ClubCorp, which "went public in September, has an existing stable of 159 membership clubs, including 108 golf and country clubs." The acquisition will "add 43 private and six public golf and country clubs, as well as one sports club." Execs from both companies said that the acquisition is "expected to be completed in the early fall" (WALL STREET JOURNAL, 8/14). In Atlanta, Christopher Seward noted the acquisition "comes as the golf industry finds itself in a rough spot with declining membership and other challenges." The National Golf Foundation recently said that about 400,000 players "left the sport last year." Sequoia completed its fiscal year in June with a "loss of $513,000." ClubCorp’s "last profitable year" was '10. The company in FY '13 lost more than $40M "despite higher revenue" (AJC.com, 8/13). In Houston, Erin Mulvaney notes the Sequoia deal will allow ClubCorp "to expand in two affluent and growing markets, Houston and Atlanta." ClubCorp "pledged to invest" up to $20M in the first two years after the acquisition in "reinvention projects to improve golf course and practice facilities, newly create or update indoor and outdoor dining and social gathering facilities" (HOUSTON CHRONICLE, 8/14).

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: ClubCorp Holdings President & CEO Eric Affeldt appeared on CNBC this morning to discuss the deal. He said that golf has "evolved as all sports do and all businesses do and our business in particular, while we are the largest owner of golf and country clubs and dining clubs in fact in the world, we really emphasize all the family elements of club life, that being dining, fitness, swim, tennis, et cetera. So it's not just golf. It's a great way for people to come together and spend time." Affeldt said his company is "in the membership business. We own predominantly private clubs so it would be membership growth. Last year we sold more memberships than any year in the last decade and when the year closes out you'll find that this year saw more golf courses trade hands than any year in the last couple of decades. I think you're seeing investors look at the space and say it's an undervalued area, and people like us, who have the ability to grow via acquisitions, are taking advantage of it" ("Squawk Box," CNBC, 8/14). At presstime, shares of ClubCorp were trading a $18.04 per share, down 0.6% from the close of business yesterday (THE DAILY).
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