Black Diamond, a leading American manufacturer of climbing and outdoor gear, has been bought by Clarus Corporation in Connecticut for $90 million. Clarus also bought Gregory Packs for $45 million and plans to merge it into Black Diamond's Utah operation. The new company, taking Black Diamond's name, will be publicly traded.
Black Diamond CEO Peter Metcalf, who started the employee-owned company in 1989 from the bankruptcy of Chouinard Equipment and its subsequent split with Patagonia, says, "We need capital. We haven't put capital into this business since I started it in 1989. We have big operations in Asia and Europe and we're moving into the ski-boot business." Last year Black Diamond, with 375 employees, had sales of $86 million, while Gregory Packs, based in Sacramento, California, had $27 million in sales.
Clarus, with large cash reserves from a 2002 software business sale, has been looking during the last eight years for companies to invest in. Black Diamond and Gregory Packs fit their investment needs, especially since the outdoor gear market has continued to grow worldwide despite the current recession. Black Diamond grew an average of 14 percent annually since it began 21 years ago and there is still huge growth potential in both Asian and European markets for BD's and Gregory's core outdoor products.
On Monday, Clarus executive chairman Warren B. Kanders told investors, "We've been interested in outdoor industry for a long time, largely because we believe in the trends toward wellness and environmentalism. We believe these brands create a unique platform to build a large, global, diversified company in the outdoor equipment and lifestyle markets."
At first glance it seems like the classic corporate take-over of a small but growing niche business, the kind of take-over that dilutes the product and leads to its demise. Not so, says Peter Metcalfe, "...the golden years of Black Diamond are not behind us but clearly ahead." Metcalfe also said, "Over the last 30 years our mantra has been to build a beautiful and respected built-to-last company. With this deal, the last pieces of that global foundation are being put into place. We are excited for the bright future that lies ahead for the Black Diamond and Gregory brands."
The merger will instantly open new markets for both Black Diamond and Gregory products. Gregory can establish itself in the European market with Black Diamond's connections, while Black Diamond can expand in Asia where Gregory packs have a big market share. Expectations are that 50% of the company's sales will be in North American, 30% in Europe, and the remaining 20% in Asia, Africa, and South America.
It's hard to know if this acquisition and merger of two iconoclastic outdoor companies is a good thing or bad. It could be good for business and help grow these unique brands. Or it could just end up being profit-driven with the core climbing products falling to the side since they aren't profitable enough for shareholders. It won't be surprising to see more clothing sold, competing with other brands like Patagonia and Royal Robbins, since clothes make money. But will product quality suffer? Will production be moved overseas with cheaper materials and cheaper labor to cut costs and boost profits?
I've been a Black Diamond fan since long before BD existed. I still have an original set of Hexentric nuts made by Chouinard Equipment back in the early 1970s, along with one of their rugby shirts and a pair of now-ragged stand-up pants with double-knees and seat for crack and big wall climbing. And I always carry Camalots and Stoppers on my rack and more than half my carabiners and quickdraws are made by BD.
It will be interesting to see what happens with the merger. My hope is that the new Black Diamond will continue to make great climbing gear, packs, and apparel--the hardcore stuff for the core climber.
Photograph above: Hexentric nuts, one of the first clean climbing tools, were invented and made by Black Diamond's precursor Chouinard Equipment. Photograph © Stewart M. Green
Comments
I’ve got a bunch of those things. You always know when somebody on the cliff is climbing with those cow bells. Must say, they make good protection.