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Bain Capital Private Equity is planning to acquire Varsity Brands, a company that capitalizes on the business of school spirit, in a deal reportedly worth about $2.5 billion.
Bain Capital announced the plans Tuesday but didn't disclose the price. Before the announcement, sources familiar with the situation told CNBC the deal would be worth roughly $2.5 billion.
Varsity Brands' foothold in the school spirits industry includes everything from the sale of cheerleading uniforms and class rings to services like cheerleading camps and helping schools improve their school pride. The bet is its service-focused business will help support product sales and fend off online competitors.
It stands out as one of the few retail businesses of scale that may also have an Amazon defense. Many large private equity firms have been investing in smaller companies lately, wary of most established brands' vulnerability to Amazon.
Varsity Brands dates to 1974, when former cheerleader Jeff Webb founded Varsity Spirit, a cheerleading empire that includes training camps, uniforms and national competitions on ESPN. In 2011, he merged the business with Herff Jones, maker of educational products like class rings and caps and gowns. The combined company bought BSN Sports in 2013, which is today the country's largest distributor of team sports equipment and apparel.
Varsity Brands was acquired by a Charlesbank Capital Partners-led investment group in 2014 for roughly $1.5 billion. Under Charlesbank's ownership, Varsity Brands acquired a number of direct sporting goods and apparel companies, including Newberry Sporting Goods in Ohio and Lowe's Sporting Goods in Kentucky.
In that time, it was also thrust into the national spotlight when it went to the Supreme Court to successfully defend the copyright of its iconic cheerleading uniforms, known for their chevrons and stripes.
Under Bain's ownership, it expects to further professionalize a fleet of 9,000 employees and sales representatives as it amps up the service-end of the business. It will continue to build the digital side of the business, creating a heftier platform to buy team merchandise online, similar to professional merchandise online retailer Fanatics. It will also continue to buy up the various regional mom-and-pop stores that sell team sports equipment and apparel.
The cheerleading business, meantime, may branch out into other team activities like student band.
The deal marks for Bain the latest of its investments in the consumer and retail space, including Canada Goose, Toms Shoes and Blue Nile.
Jefferies served as lead financial advisor to the sellers, while Goldman Sachs and Peter J Solomon co-advised. Goodwin Procter provided legal assistance. Kirkland & Ellis provided Bain legal advice.