Gander Mountain gets into water sports

Gander Mountain is on the fast track back into the catalog business. The St. Paul, MN-based sporting goods retailer announced Dec. 6 that it had acquired water sports cataloger/retailer Overton’s for approximately $70 million.

The price included the repayment of Overton’s existing debt at the closing. The deal was financed through the issuance of $24 million in Gander Mountain common stock at a purchase price of $5.90 per share, a $40 million term loan from Bank of America, and borrowings under the company’s revolving credit facility. Gratco, an affiliate of David C. Pratt, Gander Mountain’s chairman, and Holiday Stationstores, which is an affiliate of both Ronald A. Erickson, Gander’s vice chairman, and Gerald A. Erickson, a director of the company, bought the common stock.

Greenville, NC-based Overton’s will operate as a wholly owned subsidiary of Gander Mountain. Overton’s in 2006 recorded sales of more than $90 million and mailed more than 15 million catalogs. It includes a fulfillment center and call center large enough to accommodate Gander Mountain’s Internet and catalog ventures.

Gander Mountain spokesperson David Ewald says the deal complements each side. “It will help because it’s a great synergy with Overton’s being busy in the first half of the year and Gander Mountain being busy the second half of the year,” he says. “It also allows Gander Mountain to get back into direct marketing much more quickly and with an experienced partner, rather than trying to grow the direct marketing side organically. Gander Mountain views this as big upside potential.”

After Gander Mountain sold its direct arm to rival Cabela’s in 1996 for $35 million, the merchant lost the right to use its own brand or logo in direct marketing in 2005 following a two-year legal battle with Cabela’s.

Lawsuits filed in 2003 claimed Gander violated its sales agreement by selling shotgun barrels on its Website; Gander claimed the agreement wasn’t meant to give Cabela’s permanent control over its direct marketing.

A federal judge in July reversed an August 2005 ruling, giving Gander Mountain the legal right to use its logo and name in all direct marketing channels, including catalogs and e-commerce. The previous ruling gave Gander the right to enter direct marketing, but usage of the logo and name was unclear.

Lee Helman, managing director with New York-based investment bank Financo, says the favorable court ruling in July “paved the way for this deal. Overton’s provides them with the platform into the catalog and Internet sectors with its infrastructure, as well as the strong marketing team and experience.”

Helman says the deal is another example of “the convergence of channels in creating a truly multichannel retailer with a retailer acquiring the direct assets and expertise. The challenge will be in the integration and preservation of two distinct businesses.”

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