Reuters is reporting that Corsair is in talks with middle market private equity firm EagleTree Capital for acquisition of the company in its entirety. The deal is said to be valued at close to $500 million. After doing a little research though it seems that Corsair is not being sold it in entirety. Part of the Corsair brand is, and continues to be, owned by Corsair founder and Chief Executive Andy Paul, who founded the company in 1994. The other part is currently owned by Francisco Partners, an American private equity firm focused exclusively on investments in technology and technology-enabled services. In 2013, Francisco Partners made a $75 million investment in the company.
It appears that the share previously acquired by Francisco Partners is on the radar of EagleTree Capital, likely at a much higher valuation than the initial $75 million investment.
Here is the full Reuters report:
“NEW YORK (Reuters) – Middle market private equity firm EagleTree Capital is in advanced discussions to acquire Corsair Components, a U.S. manufacturer of computer peripherals and hardware geared toward the professional gaming market, for more than $500 million, two sources familiar with the matter said on Thursday.
The potential deal would come at a time that the video game industry has seen a boost worldwide from the interest in eSports, video game competitions played in front of spectators online or even in sports arenas. U.S. consumers spent $30.4 billion on video games and accessories last year, a small increase from the year earlier, according to research firm NPD Group.
The sources asked not to be named because the matter is private. Corsair and EagleTree declined to comment.
Corsair is currently owned by Chief Executive Andy Paul, who founded the company in 1994. Francisco Partners made a $75 million investment in the company in 2013 after the company scrapped its IPO plans. Francisco did not respond to requests for comment.
Based in Freemont, California, Corsair makes high performance gaming equipment, USB flash drives, gaming keyboards, mice and headsets. It owns popular PC gaming brand Raptor Gaming, which it acquired in 2012.
One of Corsair’s competitors, Razer Inc, backed by Intel Corp and Hong Kong billionaire Li Ka-shing, is planning to go public later this year and is aiming for a valuation of over $3 billion, Reuters has reported.
EagleTree, formerly Wasserstein Partners, has secured committed financing from Goldman Sachs, Macquarie Group and BNP Paribas, they added. Societe Generale will also be part of the syndicate, one of the sources said. The banks are providing a roughly $330 million secured loan package with first- and second-lien seniority. The loans will put Corsair’s debt-to-Ebitda, or earnings before interest, taxes, depreciation and amortization, at four and a half times on a first-lien basis and six times total. Goldman, Macquarie and BNP did not respond to requests for comment. Societe Generale declined to comment.
EagleTree will make a roughly 40 percent equity contribution to the purchase price.
EagleTree is expected to pay nine to 10 times Corsair’s Ebitda of roughly $55 million, which would value the company at around $525 million at the midpoint, the sources said.”