As astute institutional investors identify emerging opportunities in the United States market, Cincinnati-based Hauser Private Equity recently played a key role in a notable acquisition with its investment partner Acon Investment. Acon Investment financed the deal for Sweden-based Dometic’s purchase of Igloo, the United States’ leading cooler manufacturer in September 2021. The deal will strengthen Dometic’s competitive position in the lucrative United States market. Hauser Private Equity has partnered with Acon Investments for the past eight years on similar transactions.
On September 17, 2021, Sweden-based Dometic signed an agreement to acquire Igloo, the dominant leader in the United States cooler market. Under the agreement’s terms, Dometic will purchase Igloo for $677 million USD on a cash and debt-free basis. Dometic will utilize its internal funds for the transaction.
From an operations perspective, the Dometic-Igloo transaction will result in a stronger combined sales platform for both companies. In turn, this enhanced sales environment is expected to produce $150 million USD in higher annual sales. In addition, supply chain and distribution enhancements will likely result in cost benefits of $5 million USD annually.
The agreement also contains an earn-out element of a maximum of $223 million USD. This amount will be realized depending on Igloo’s future EBITDA outcomes. Within five years, Igloo’s total annual EBITDA improvements are expected to reach approximately $50 million USD.
Execution of the Transaction
With Acon Investments as the deal lead, Hauser Private Equity and Mark Hauser maintained detailed knowledge of the transactions through its ownership of Igloo. The transaction is expected to close during 2021 Q4, assuming the execution of regulatory approvals. No changes are expected to the Igloo family of brands. Igloo will become an integral part of Dometic’s segment Global and will report its operations accordingly.
Overview of the Transaction Partners
Both Dometic and Igloo maintain strong competitive positions within their respective outdoor products markets. The transaction brings distinct advantages and opportunities for both prominent companies.
Dometic Group AB is a Sweden-based outdoor products manufacturer. This global company’s quality-of-life accessories can be found in RVs, campers, boats, and other mobile-living end users’ products.
Examples of Dometic products include multiple sizes of portable refrigerators and wine coolers. Dometic’s higher-dollar product spectrum also includes safes and power generation equipment.
Dometic’s Marketing and Expansion Strategy
From a marketing perspective, Dometic’s Igloo purchase puts the acquiring company in a much stronger marketing and distribution position relative to the North American market. Additionally, the Igloo transaction gives Dometic access to the growing lower-ticket outdoor products segment.
Over time, products with different price points will reduce the cyclical nature of Dometic’s product sales. This strategy will also encourage further global growth. For perspective, Dometic’s 2020 annual revenue was $1.9 billion USD.
Taking a macro view, Dometic’s Igloo purchase is one of eight 2021 acquisitions (so far). Dometic’s president and CEO Juan Vargues states that the Company’s move is part of its overall expansion strategy.
“Our strategy for profitable expansion is built on a combination of organic and acquisitive growth. This is our eighth acquisition this year and our pipeline of potential future acquisitions remains strong,” he concluded.
Texas-based Igloo is a leading producer of passive cooling boxes (or coolers). In fact, Igloo pioneered the cooler product segment during the Company’s 1947 launch. Since that time, Igloo has remained the globe’s Number 1 cooler brand. In 2021, over 110,000 retail storefronts worldwide carry the versatile Igloo coolers.
In addition to its diversified cooler products, Igloo also manufactures a line of coordinated drinkware items. Collectively, Igloo markets over 500 distinct products to its retail customer base. With 92% of the US net sales, the Company has a commanding presence in this consumer-focused sector.
Since its 1947 inception, Igloo has focused on the larger outdoor market, which has steadily expanded over the decades. In 2020, sales considerably increased as pandemic lockdown-weary consumers turned to outdoor recreation options.
For perspective, Igloo reported $401 million USD in net sales for the most recent 12-month cycle. This represented an increase of 24% over the previous reporting period. The Company also achieved a 10.1% EBITDA margin for the period.
Igloo’s Manufacturing and Ownership Specifics
Igloo’s Katy, Texas manufacturing facilities enable the Company to make most of its products in-house. This provides shortened lead times, production flexibility, and cost benefits for its North American customer and dealer bases.
Prior to the Dometic transaction, Igloo was owned by the ACON Investments private equity firm. In 2014, ACON Investments purchased Igloo from J.H. Whitney, another private equity company. Under J.H. Whitney’s ownership, Igloo experienced notable organic growth.
The Deal’s Effects on the Cooler Market
The Dometic-Igloo transaction will open up new markets to both companies. In addition, investors will likely expect a dramatic increase in Igloo’s sales. Finally, Dometic’s significant financial resources may enable the development and introduction of innovative new Igloo products.
Taking a broader perspective, Dometic cites MarketsandMarkets and EMR research in its market projections. The Company notes that the global cooler and drinkware market is a “growing $8 billion market fueled by the outdoor trends visible across the world.
“Igloo has a clear number-one position in this market in the U.S. Combined with Dometic’s global presence and product offering of both active and passive cooling boxes, drinkware, and fast-growing range of other outdoor products, the acquisition is expected to create a strong base to further grow in the outdoor segment.”
Significant Market Share Challenges
The addition of Igloo’s products will certainly improve Dometic’s North American market prospects. Even with this significant advantage, though, Dometic will face stiff market share competition from firms such as YETI, Inc., Coleman, and ORCA. There is also room for smaller companies with the innovation and resources to disrupt this growing competitive arena.
About Hauser Private Equity
Hauser Private Equity is a Cincinnati-based hybrid private equity fund management firm. Founded in 2008, the Company is an outgrowth of highly successful Hauser Capital Partners. Hauser Private Equity focuses on direct co-investments in the lower-middle to the middle-market range.
Specifically, Hauser often forms collaborative partnerships with control buyout funds. Other beneficial partners include managers of growth equity, subordinated debt, or special situation funds.
Hauser Private Equity’s co-investment partners generally include funds ranging from $250 million to $2 billion. Ideal partner candidates are North American-based funds with investment models that provide operational leadership to similarly domiciled portfolio businesses.
Optimal Investment Partners
Hauser Private Equity’s seasoned managers target upwardly trending businesses in several verticals. Desirable sectors include healthcare, consumer goods, business services, financials, and industrials markets. The executive management team undertakes exceptional due diligence and execution to bring each co-investment to a successful conclusion.