Adidas puts CCM on the market

Move comes on heels of sluggish sales that worsened in the fourth quarter

For the second time in less than a year, an iconic hockey equipment brand is up for sale.

Adidas Group, the German sporting giant, says it is putting Montreal-based skate and equipment maker CCM on the market.

The sale comes just months after Performance Sports Group Ltd., the troubled owner of CCM rival Bauer, was bought out of bankruptcy proceedings by Fairfax Financial Holdings Inc. and Sagard Holdings Inc., an affiliate of Montreal’s Desmarais family.

CCM is one of the largest designers, manufacturers and marketers of hockey equipment and related apparel, and has been the official outfitter of the National Hockey League including star Sidney Crosby and up-and -comer Connor McDavid. However, starting with the next hockey season, Adidas will have the exclusive license for NHL jerseys.

Speculation as to who the interested buyers might be has already begun. Brookfield Asset Management, which expressed interest last year in Performance Sports Group Ltd., is one potential suitor. The Toronto-based alternative asset manager went as far as taking a stake in Performance Sports, but ultimately walked away. Claire Holland, Brookfield’s vicepresident of communications, declined to comment on whether CCM is on the company’s radar.

The Performance Sports deal closed last month and puts Fairfax and Sagard out of the running for CCM, according to the hockey gear maker’s president, Philippe Dubé.

“We would not be acquired by Power Corp. or Fairfax because they’ve just acquired PSG, our competitor,” Dubé told the Financial Post. “Between Bauer and CCM, we would own 90 per cent of the market share worldwide, so that would not work for sure.”

He said it is early days, but did not rule out talks with Brookfield, noting that there were “about 20 interested parties” for Performance Sports, some of which are likely to pursue CCM.

“Obviously some parties that were involved with PSG will probably get involved with us,” he said, adding there will most likely be months of talks and negotiations before the firm changes hands.

Over the next few weeks, executives and bankers, who CCM is in the midst of retaining, will pore over a list of prospective buyers, including some that have contacted the hockey equipment maker in recent “months or years,” Dubé said. “The list is extremely long right now and the job that we’re going to have to do in the next few weeks is to do a screening … to try to define a short list of companies.”

Adidas has toyed with the idea of jettisoning CCM before, with a serious attempt involving talks with suitors in 2013. The latest attempt was announced this week on the heels of a year of sluggish sales that worsened in the fourth quarter.

Both the parent company and the sports unit are committed to closing the deal this time, Dubé says. “We want to do it. Adidas and CCM, we are very much motivated to get it done.”

Dubé said CCM was able to increase its market share in 2015 and 2016, despite industry-wide difficulties including the bankruptcy last year of a large U.S. retailer that took a bite out of overall sales.

“The industry was upside down, mainly coming from the U.S. Market … with the bankruptcy of Total Hockey, which was one of the main customers in the U.S. with 32 stores,” he said.

CCM’s history dates back to the turn of the last century. It started out making bicycles before moving into skates and hockey equipment. It went bankrupt once, in the early 1980s, and the brand ultimately landed with Adidas in 2005.

Montreal’s Desmarais family also has a connection to CCM through Power Financial’s stake in European holding company Groupe Bruxelles Lambert. GBL owns about five per cent of Adidas, according to the Herzogenaurach, a German sporting goods company.

The list (of potential buyers) is extremely long right now.