Hollywood Bowl announce acquisition of Canadian Bowling business Teaquinn Holdings Inc
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”).
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 may similarities with the UK bowling market and we believe there is unmet demand for well invested, affordable, family-friendly 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.
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.