REG - Hollywood Bowl Group - Acquisition of Teaquinn Holdings Inc.

Hollywood BowlAnnouncement

25/05/2022 07:00

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RNS Number : 6538M  Hollywood Bowl Group plc  25 May 2022

25(th) May 2022

 

Hollywood Bowl Group plc

("Hollywood Bowl" or the "Group")

 

Acquisition of Teaquinn Holdings Inc., a Canadian bowling operator

 

Strategic purchase of a high-quality, well run ten-pin bowling business that
provides a growth platform in a new international territory

 

Hollywood Bowl, is pleased to announce the acquisition of Teaquinn Holdings
Inc. ("Teaquinn"), a Canadian-based bowling business, for a total
consideration of CAD 17 million (approximately £10.6 million) to be satisfied
by an initial payment of CAD 13.6 million in cash and a deferred consideration
of CAD 3.4 million (the "Acquisition").

 

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.

 

Information on Splitsville

 

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.

 

Terms of the Acquisition

 

Under the terms of the Acquisition, Hollywood Bowl will acquire 100% of the
issued share capital of Teaquinn for a total consideration of CAD 17 million
(approximately £10.6 million) from Pat Haggerty and his Family Trust. The
consideration will be satisfied by an initial payment of CAD 13.6 million in
cash and a deferred consideration of CAD 3.4 million. The deferred
consideration will be payable at the earlier of Pat Haggerty leaving the
business and the end of FY2025. There are no other conditions on payment of
this consideration.

 

Additionally, Pat Haggerty will be incentivised by a separate cash-based earn
out scheme which will be based on an EBITDA multiple and the financial
performance of Teaquinn. The earn-out crystalises no earlier than the end of
FY2025.

 

The total aggregate amount payable under the terms of the Acquisition,
including the earn-out is capped at CAD 34 million.

 

The Acquisition will be funded from the Group's existing cash resources and is
forecast to be earnings accretive for the year ending FY2023 with returns in
line with Hollywood Bowl's operational and financial investment criteria.

 

Strategic rationale for the Acquisition

 

Hollywood Bowl Group believes there is significant opportunity to add value to
the existing Splitsville business through leveraging its customer-led
operating model, technology and digital marketing experience and through
increasing the scale of the business. Whilst very well established, the
Canadian bowling market is fragmented and underinvested, and ripe for
consolidation. In addition, there are number of well populated urban areas
that are currently underserved by family entertainment offers. The Group has
an identified pipeline of new site opportunities with the potential that at
least 10 sites can be added over the next five years.

 

 

 

 

Stephen Burns, Chief Executive of Hollywood Bowl, commented:

 

"We are delighted to have acquired Splitsville and Striker Bowling Solutions
which marks a key milestone as we take our first step internationally. This is
a unique opportunity to acquire a well-run business with an experienced
existing management team in a new territory where we see significant potential
for sustained profitable growth. Canada shares many similarities with the UK
bowling market and we believe there is unmet demand for well invested,
affordable, family-friendly bowling led experiences. We are confident that
Splitsville's operations and brand will provide us with an excellent platform
for further growth and that together with Pat and his team we can continue to
enhance and evolve Splitsville's existing customer offer through our extensive
indoor leisure experience."

 

Pat Haggarty, Founder and President of Splitsville and Striker Bowling
Solutions, said:

 

"I am very excited that our business will now be part of the Hollywood Bowl
Group. We share an ambition and vision for the long-term growth of the
business and crucially, we are a great cultural fit. Hollywood Bowl Group has
led the ten-pin bowling industry in a number of ways for many years and I am
looking forward to working with Stephen and his team and applying their
knowledge and experience to our operations in ways which will enhance our
customers experience as we grow the business."

 

-Ends-

 

 Enquiries:                                        Via Tulchan Communications

 Hollywood Bowl Group PLC
 Stephen Burns, Chief Executive Officer
 Laurence Keen, Chief Financial Officer
 Mat Hart, Chief Marketing and Technology Officer

 Tulchan Communications
 Elizabeth Snow                                    Hollywoodbowl@tulchangroup.com
 James Macey White                                 +44 (0)20 7353 4200
 Laura Marshall

 

 

Notes to Editors:

 

Hollywood Bowl Group plc

 

Hollywood Bowl Group is the UK's largest ten-pin bowling operator, with a
high-quality portfolio of 67 centres operating across the UK under the
Hollywood Bowl, AMF and Puttstars (mini golf) brands. The Group specialises in
operating large, high quality bowling centres, predominantly located in
out-of-town multi-use leisure parks (typically co-located with cinema and
casual dining sites) and large retail parks. The centres are designed to offer
a complete family entertainment experience with each centre offering bowling
lanes or three mini-golf courses alongside on-site dining, licensed bars and
state-of-the-art family games arcades.

 

 

 

 

Splitsville and Striker Bowling Solutions

 

Splitsville operates five large entertainment centres each with ten-pin
bowling lanes, dining, bar and amusement offers. Splitsville is a well
operated business with a high-quality management team and a long track record
of performance. Striker Bowling Solutions, a supplier and installer of bowling
products and which owns the exclusive rights to Brunswick product distribution
in Canada.

 

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