Mountain Equipment Co-op Sold To Private U.S. Investment Firm
Update: October 2nd, 2020 - Sadly, the sale has been approved.
After reportedly loosing 11 million last year, Mountain Equipment Co-op was sold to private U.S. investment firm Kingswood Capital Management today. Their board of directors unanimously approved the deal which will have Kingswood acquire MEC's assets, including the majority of its retail stores. Kingswood has created a B.C. based affiliate to run the business and instated Eric Claus as the new CEO for MEC.
“After the pandemic hit, it became apparent that we were going to have a difficult time finding any refinancing on acceptable terms. And that’s ultimately what happened. As part of the review, the Board reached out to more than 65 lenders to seek refinancing, and also launched a process to explore a sale. Nine potential bidders initially signed letters of intent, and the board received a “handful” of offers, but chose Kingswood because it committed to keeping the largest number of stores open.
After careful consideration of all viable options, the Board made this difficult decision. Despite significant progress on a thoughtful turnaround strategy undertaken by new leadership, no strategy could have anticipated or overcome the impact of the global pandemic on our business. Today’s announcement, including the transition from a co-operative structure, is creating a positive path forward for MEC. Kingswood’s commitment to honouring the MEC ethos and the solid financial footing that this transaction will provide gives us tremendous confidence in the future. Since our founding in 1971, MEC’s deeply loyal customers have been synonymous with who we are and what we do. That won’t change.”
“MEC is an iconic brand founded on strong values and has a loyal following. We have tremendous respect for those values and the loyal membership and are honored to be partnering with Canadian operating partners who will represent us on the ground in Canada working with MEC’s management team following the closing to ensure a bright future for MEC. Upon completion of this transaction, we – together – can inspire and equip Canadians in leading an active outdoor lifestyle for years to come.”
This will also mean that MEC (which first opened in 1971) is no longer a member owned co-operative. As long as the deal passes regulatory approvals, it will close the fourth quarter of 2020. The change-over could also mean that some of the retail locations will close plus putting the new 20,000 square-foot store at Midtown Plaza in Saskatoon, Saskatchewan (the Co-op’s first retail location in Saskatchewan) in jeopardy.
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