LONDON, UK: Hollywood Bowl announced the acquisition of Teaquinn Holdings Inc. (Splitsville), a Canadian-based bowling business, for a total consideration of CAD 17 million.
The consideration (approximately £10.6 million) will be satisfied by an initial payment of CAD 13.6 million in cash and a deferred consideration of CAD 3.4 million.
Acquisition highlights:
· Teaquinn comprises of Splitsville, an operator of ten-pin bowling centres and Striker Bowling Solutions, a B2B supplier and installer of bowling equipment.
· Splitsville is a well operated business with a high-quality management team and a long track record of performance; operating five large entertainment centres each with ten-pin bowling lanes, dining, bar and amusement offers.
· Pre-Covid, Splitsville operated four bowling centres with CAD 12.3 million revenue and CAD 2.7 million EBITDA on a pre IFRS 16 basis. A fifth centre was acquired in 2021.
· The Acquisition will be funded from the Group’s existing cash resources and is expected to be earnings accretive for the year ending FY2023.
· Teaquinn’s Founder and President, Pat Haggerty, will remain with the business and be incentivised by a separate, capped, earn out scheme which crystalises no earlier than the end of FY2025.
· The Group believes there is significant opportunity to add value to the existing Splitsville business and, in a highly fragmented and underinvested market, the Group has identified a pipeline of acquisitions as well as new site opportunities – with returns in line with Hollywood Bowl’s financial investment criteria – and the potential to add up to 10 sites over the next five years.
Splitsville is made up of five large family entertainment centres, two of which are freehold assets. All centres have ten-pin bowling lanes, a large bar and diner and an amusements offer.
As part of the transaction Hollywood Bowl is also acquiring Striker Bowling Solutions, a supplier and installer of bowling products and which owns the exclusive rights to Brunswick product distribution in Canada.
Splitsville is a well operated business with a high-quality management team and a long track record of trading performance.
Pre-Covid it operated four bowling centres with CAD 12.3 million revenue and CAD 2.7 million EBITDA in FY2019, with the combined businesses generating CAD 18.7 million of revenue with an EBITDA of CAD 3.0 million. A fifth centre was acquired in 2021.
The Canadian government adopted a strong approach to Covid restrictions and the Splitsville business was initially closed for four months from March 2020, before reopening with capacity and group size restrictions for four and a half months. In mid-November 2020 another three-and-a-half-month closure period ensued, with a seven-week reopening from March 2021 followed by a three-month lockdown which ended 15 July 2021.
A final period of reopening started in July 2021, with capacity restrictions finally removed in September 2021.
Compulsory face coverings and proof of vaccination restrictions were finally relaxed in early March 2022 and Splitsville has seen strong trading since then and is currently outperforming FY2019 comparables.
For the financial year ended 31 December 2021, Teaquinn reported unaudited EBITDA of CAD 2.7 million and Net Income of CAD 1.9 million.
Supported by the Group, Founder and President of Teaquinn, Pat Haggerty, will remain with the business and, together with his management team, who are also planning to stay with the business, will be responsible for delivering the expansion plan.
