ClubCorp, Dallas, has reached a buyout agreement with the affiliates of private equity firm Apollo Global Management for approximately $1.1 billion, the companies announced Sunday in a media release. The transaction is subject to shareholder approval and is expected to close sometime in the year's fourth fiscal quarter. After completion, the company will become privately held and will be delisted from the New York Stock Exchange, where it has been traded since it became public in 2013.
In January, the company had announced that it had set up a strategic review committee to enhance the value of the company, including a possible sale of the company. Since last fall, ClubCorp executives had been pressured by active investor group FrontFour Capital Group LLC to consider a strategic sale. This April, the company announced instead of a sale, it would focus on executing a three-pronged strategy of organic growth, reinvention and acquisitions. The April decision was due to the inability to find a company willing to purchase the whole company, according to Reuters, which also reported that ClubCorp kept the committee in place despite the decision not to sell at that time.
“We are pleased to reach this agreement with the Apollo funds, which follows a comprehensive review of strategic alternatives by ClubCorp’s Board of Directors,” ClubCorp chairman John Beckert said in the release about the sale to the Apollo Group. “With the support of the Apollo funds, we are confident that ClubCorp will be able to continue building on its success by providing its members with unrivaled experiences at its clubs. This transaction represents the culmination of our review of strategic alternatives and achieves our goal of enhancing value for shareholders. The company looks forward to working closely with Apollo as it enters the next stage of its growth.”
Apollo, which as of March 2017 had $197 billion worth of assets under management, will pay $17.12 per share in cash for ClubCorp, according to the release. This represents a premium of approximately 31 percent over ClubCorp’s closing stock price on July 7.
“We are excited for our funds to be acquiring ClubCorp,” Apollo senior partner David Sambur said in the release. “We look forward to working with ClubCorp’s outstanding management team and talented employees, who have built a best- in-class member-centric business that delivers exceptional experiences. We plan to leverage Apollo's resources and expertise while working with ClubCorp’s dedicated team to continue to grow the business and provide the highest level of service and club offerings to members."
Eric Affeldt, who had been ClubCorp CEO, said in April that he would retire up the hiring of his replacement. No CEO replacement has been announced.
In May, two independent directors joined ClubCorp’s executive board after ClubCorp reached an agreement with FourFront. FourFront agreed to withdraw its nominations for the board and voted for the two independent directors: Simon M. Turner, former president of global development at Starwood Hotels & Resorts, and Emanuel Pearlman, executive chairman of the board of directors at Empire Resorts.
Last month, ClubCorp announced a strategic alliance with Topgolf to grow interest in golf. Topgolf offers an interactive, technology-infused and fast-paced golfing experience to its 10.5 million players, according to the company. Part of the goal of the agreement would be to transition those Topgolf members to playing on greens. The agreement may also allow Topgolf to provide more technology to ClubCorp's 430,000 members. That technology might include Topgolf's Toptracer Range, which allows golfers to track their ball flight related to ball speed, angle, distance and accuracy.
ClubCorp reported its 12th consecutive quarter of growth this spring, with first quarter revenue of $221.3 million. This was a 3 percent increase year-over-year. The company was ranked No. 4 on Club Industry’s Top 100 Health Clubs of 2016 with $1.1 billion in 2015 revenue.