Big 5 Sporting Goods is being purchased by private equity firm Capitol Hill Group and Worldwide Golf in a $112.7 million deal that will take it private, part of a flurry of mergers and acquisitions involving retailers.
The El Segundo, California-based sporting goods chain, with 414 stores, said it had entered into a definitive merger agreement to be purchased by a partnership of Capitol Hill and Worldwide Golf, a golf retailer with over 95 stores. The all-cash transaction has an enterprise value of roughly $112.7 million, including the assumption of about $71.4 million in credit-line borrowings as of June 29.
"This acquisition combines Capitol Hill Group’s financial resources with Worldwide Golf’s specialty retail expertise to provide Big 5 with the long-term capital and strategic support to re-energize growth and further build on its competitive position in the sporting goods retail sector across its western U.S. footprint," Big 5 said in a statement.
It will remain an independent company within Capitol Hill's portfolio "and leverage the combined resources of the partnership," according to Big 5.
Big 5 faces challenges including stiff competition from players such as Dick's Sporting Goods, a national chain, as well as budget-conscious consumers cutting back on their discretionary spending.
There's been a surge of deals this year, with private equity firms showing an appetite for buying retailers. Sycamore Partners forged a $10 billion agreement to buy Walgreens Boots Alliance and take it private, while Skechers will also go private when it's acquired for $9.4 billion by 3G Capital. In other pending acquisitions, Dick's Sporting Goods is purchasing Foot Locker for $2.4 billion, and Caleres is acquiring shoe brand Stuart Weitzman for $105 million.
The pending Big 5 deal will bring the retailer to the next stage of its evolution, according to Capital Hill CEO Theodore Shin.
“Big 5 has built an impressive foundation as a leading bricks-and-mortar sporting goods retailer," Shin said in a statement. "We also admire the deep history and culture of the company, and look forward to carrying that forward into the future.”
Big 5 employs a traditional sporting goods store format that averages 12,000 square feet. Its product mix includes athletic shoes, apparel and accessories, as well as outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, home recreation, tennis, golf, and winter and summer recreation.
Some store closings
In April, Big 5 reported it has closed eight stores in the fiscal 2025 first quarter "as part of the company’s ongoing efforts to optimize its store base." For the remainder of fiscal 2025, it said it planned to close about seven additional stores and didn't expect to open any new locations.
In the first quarter, Big 5's net sales were $175.6 million, compared to $193.4 million in the prior-year period. Same-store sales decreased 7.8% for the quarter.
Santa Ana, California-based Worldwide Golf is a nationwide retailer of golf equipment, apparel, shoes and accessories. It serves the United States and Canada under banners such as Roger Dunn Golf Shops, Edwin Watts Golf Shops, Golfers’ Warehouse, The Golf Mart, Van’s Golf Shops, Uinta Golf, Las Vegas Golf Superstore, Bobick’s, Global Golf Outlet, Mike’s Golf Outlet, Cool Clubs and Golfdom.
Capitol Hill is a Bethesda, Maryland-based private investment firm with diversified holdings, including brick-and-mortar retail, e-commerce, apparel, logistics and real estate.
Under the merger agreement, Big 5 stockholders will receive $1.45 per share in cash. That represents a premium of roughly 36% to the company’s 60-day volume weighted average price. The deal is expected to close this year.
When the transaction is completed, Big 5’s common stock will no longer be listed on the Nasdaq Stock Exchange, and it will become a private company.
For the record
Moelis & Co. served as financial adviser and Latham & Watkins as legal adviser to Big 5 Sporting Goods. Skadden, Arps, Slate, Meagher & Flom, Holland & Knight and Sklar Kirsh served as legal advisers to Capitol Hill Group.