Ironbridge Capital


		Barbeques Galore 1. Summary of the Deal On 26 October 2005, Ironbridge Capital completed the management buyout of Barbeques Galore Ltd ("BBQ"), a public company listed on NASDAQ. BBQ operates more than 165 owned and licensed retail stores in Australia and the USA. BBQ is a leading specialty retailer of barbeques and barbeque accessories, with annual revenues of circa $300m. We viewed BBQ as an attractive investment opportunity as it has a strong brand, high gross margins and a competitive advantage in the high growth top-end barbeques market. The two key initiatives undertaken by Ironbridge in developing our investment case were to identify an excellent retail management team to replace the retiring founders and to analyse and prove up a cost initiatives program which should substantially improve the underlying earnings of the business. Ironbridge worked closely with Jonathan Pinshaw on this transaction, a pre-eminent Australian retailer who had previously successfully turned around and run similar substantial retail offerings in Australia. back to top 2. The Business BBQ has a range of proprietary barbeque brands which generate high product margins (Grand Turbo, Turbo, Apollo, Cordon Bleu, Cap’n Cook, Cook-on, Beefmaster). These products, in common with the bulk of its competitors’ products, are sourced competitively from major suppliers in China. The stores also stock third party barbeques, fireside products, proprietary heater products and barbeque accessories. In Australia the stores also carry a range of outdoor furniture. Brand strength: BBQ has a strong brand presence in Australia with 72% unaided awareness and 90% prompted awareness. In California, its strongest market in the USA, it currently has 37% unaided brand awareness. Market: The barbeque market in Australia, including accessories, is worth c. A$300m, growing at 2.4% pa. BBQ is strongest in the "best" product segment (stainless steel barbeques >$1,000). Competitors: In Australia, BBQ is the market leader and has 27% market share of the retail barbeque business. In California, BBQ has a 10% market share. Competition, both in Australia and the USA, is primarily focused on low to mid range products and is driven by major home renovation chains. BBQ distinguishes itself through range, product quality, advice, service, accessories, spare parts and warranties. back to top 3. The Management Team The BBQ management team had significant experience in the category but we believed the team would benefit from the introduction of a number of new strategic and operational initiatives. Jonathan Pinshaw, Chairman, Jonathan is a highly regarded senior executive. He has previously successfully acted as CEO for Freedom Furniture and OPSM Group and is currently the Chairman of Just Group. Jonathan has a strong track record in retail turnarounds and will be taking an active role in the business as Chairman. back to top 5. Transaction Rationale *Leading brand and market position* BBQ is the leading Australian barbeques retailer with a market share of more than 27% and the leading specialist barbeques retailer in the USA, with market share in California of 10%. *Attractive business fundamental* The USA and Australian businesses have consistently delivered attractive gross margins and steady sales growth. *Operational improvement opportunity* as new management practices, operational benchmarking and direct control of corporate cost are assumed. back to top