VANCOUVER, British Columbia (BRAIN) — Mountain Equipment Co-op, Canada's outdoor gear co-op, has agreed to be acquired by Kingswood Capital Management, LP, a Los Angeles-based investment group. Kingswood will acquire MEC's assets through the Companies' Creditors Arrangement Act, a Canadian law that allows insolvent companies to restructure.
The move means that MEC, which has about 5 million members as Canada's largest consumer co-operative, will transition away from the member-owned structure to become a privately-owned company.
"MEC is an iconic brand founded on strong values and has a loyal following," said Kingswood's managing partner, Alex Wolf. "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."
Eric Claus will lead the company as Board Chair and CEO.
MEC explored several options to restructure following several years of declining revenues, exasperated by the COVID-19 crisis, MEC's board chair Judi Richardson said.
"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," Richardson said. "Today's announcement, including the transition from a co-operative structure, is creating a positive path forward for MEC. Kingswood's commitment to honoring 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."
According to a release, Kingswood has agreed to buy "the majority" of MEC's 22 stores. The transaction is expected to close in the fourth quarter of 2020.
