ClubCorp (CC) reached an agreement to purchase Atlanta-based Sequoia Golf for $265 million, an acquisition that will make CC the largest owner/operator of United States clubs and golf courses. Headquartered in Dallas, Texas ClubCorp’s purchase could conceivably pave the way for ownership-oriented CC’s expansion into the third part management business. Sequoia’s portfolio of 50 courses will increase ClubCorp’s total of owned and managed clubs to 209.
Sequoia Golf portfolio consist of 30 owned clubs, primarily in Atlanta and Houston, 3 leased courses and 17 third party management operations. The purchase includes both the Sequoia-branded properties and 20 plus Canongate-branded clubs under their umbrella. Founded in 2002 by former American Golf executive Joe Guerra, Sequoia was initially concentrated almost entirely in greater Atlanta market, but in recent years has established a presence in Houston with the purchase of numerous private golf clubs including the magnificent Woodlands Country Club and its 63 holes. In addition they operate in California, Denver and Chicago.
A few years ago, I was asked to do a story on the golf choices around the Peachtree City development south of Atlanta. I had the opportunity to experience the Canongate branded clubs designed by the likes of Palmer, Couples, Player and Lee, all of which were top notch tracks in lovely residential areas with fine amenities and beautiful clubhouses.
ClubCorp CEO Eric Affeldt said, “The thing we liked about Sequoia is they are primarily in the private club arena, as we are, and like us, nearly 50% of their revenues are dues-based. Another thing, is that management contracts are not our core business, but we have always said if we were going to get into that business, it would probably be through acquiring another company with an existing management platform in place.” In addition the purchase will further increase ClubCorp’s industry leading economies of scale and will drive additional procurement, operational and other cost efficiencies.
The initial Wall Street reaction on the NASDAQ exchange to ClubCorp’s purchase was positive, with ClubCorp’s stocks rising 7 % on strong volume by mid-day of the announcement, approaching the high of $19 per share since the ClubCorp IPO last year.
Sequoia CEO Guerra said. “ClubCorp is the best fit for our members, employees, and partners and the right evolution of our portfolio into a strong network of clubs. The leadership that CC has provided in its club reinventions, adding member amenities, developing its O.N.E. product offering and growth via acquisitions is a tremendous model fro the golf industry.” Joe will serve as a Senior advisor to ClubCorp after the sale closes later this year, but Affeldt indicated that details of any personnel decisions would be worked out during the transition period of the purchase.
The Sequoia sale is the latest in a series of major transactions in the golf industry. The CNL portfolio of 48 courses were purchased earlier this summer by Arcis Equity Partners. Fortress Investments bought American Golf in December 2013 and TroonGolf controlling interest was acquired by Kohlberg & Company and Great White Shark Enterprises this summer.