2004: Business - Sportsman’s Guide buys TGW

The Golf Warehouse, the largest dedicated e-commerce golf operation, was bought June 29 by The Sportsman’s Guide Inc., a catalog and Internet retailer based in South St. Paul, Minn.

The acquisition, estimated at approximately $30 million, was funded with cash and an expanded bank credit facility. According to Falconhead Capital, a New York-based private equity firm and TGW’s majority stakeholder, an auction involving 16 potential buyers had been ongoing for several weeks.

TGW founders – brothers Mark, Mike and Rick Marney – who owned a 28 percent stake in the company, will continue to manage the business.

The company’s headquarters will remain in Wichita, Kan., and The Sportsman’s Guide said it intends to expand TGW’s warehousing space. No plans were announced for a work force reduction of TGW’s 120 employees.

“We had made the decision almost two years ago that our growth was going to come from catalogs because we felt that was the best way to target customers,” said Mark Marney, TGW’s chief executive. “The Sportsman’s Guide had, I believe, circulation of 52 million catalogs last year. So that will help us a lot. They are very analytical and concerned about mailing to the best buyers and figuring out who those best buyers are.”

TGW (www.tgw.com), founded in 1997, had sales of $42 million in 2003, and Greg Binkley, chief executive of The Sportsman’s Guide, said “we think they have the capacity to run a $100 million business.” The Sportsman’s Guide plans to make TGW’s catalog business a top priority. TGW’s four annual catalogs reached 1 million people last year and generated sales of about $9 million, Binkley said.

The Sportsman’s Guide, which began online operations in 1998, had net sales of $194.7 million in fiscal 2003. Of that total, $69 million (or 36 percent) was generated online, while the balance came from its catalog business. Its net income last year was $6.2 million.

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