Adidas has "agreed to sell" TaylorMade Golf to a newly formed affiliate of KPS Capital Partners for $425M, according to Dusek & Lusk of GOLFWEEK. About half of that amount "will be paid in cash, while the remaining portion will be paid in the form of a secured note and contingent considerations." The final sale is "expected to be completed" later this year. This comes after Adidas announced last May it would sell its TaylorMade, Adams and Ashworth brands to "focus on higher-growth opportunities, especially in apparel and shoes." TaylorMade had "faced strong headwinds in recent years, with losses in market share in key categories and complaints from retailers -- particularly from Dick's Sporting Goods -- that the company's rapid product cycles were unsustainable." Despite "uncertainty over an impending sale," TaylorMade has been "busy signing premier golfers to endorsement contracts." The company "re-signed Jason Day and Dustin Johnson to contract extensions," and on Tuesday announced the addition of Rory McIlroy. Including Sergio Garcia, TaylorMade has "four of the top six players in the Official World Golf Ranking" playing its equipment (GOLFWEEK.com, 5/10). In N.Y., Josh Kosman cites sources as saying that of the $425M, KPS "will put up" only about $200M in cash. Sources said that the "difference between the two prices could be covered with earn-outs and the repayment of a secured loan Adidas is making to TaylorMade." A source said that Adidas last year was "seeking more than" $500M for TaylorMade (N.Y. POST, 5/11). ESPN.com's Darren Rovell noted TaylorMade's sale price is "evidence of the fall of the golf equipment market." In '12, Adidas golf "brought in" $1.7B in revenue. Four years later, total revenue was "slightly above" $500M. In August, Adidas' biggest competitor, Nike, "decided to stop making golf equipment." A month later, nationwide golf retailer Golfsmith "filed for bankruptcy" (ESPN.com, 5/10).
OFF TO A GOOD START: Golf Channel's Matt Adams said KPS is making a "smart move" if, as is indicated, they "work with the existing management of TaylorMade." Adams: "If they can bring some efficiencies to fore and, at the same time, if they can also put some money in the areas of potentially more acquisitions, it could be very interesting.” He added the group has indicated it is "willing to acquire to also grow the brand." Adams: "We have some incredibly exciting times ahead in the equipment manufacturing area” (“Golf Central,” Golf Channel, 5/10). Golf Channel's Geoff Shackelford said Adidas was a "little tough on the golf industry before they were trying to sell it," and it "left a bitter taste in a lot of people's mouth that they kind of put the game down." Shackelford: "So to see that somebody wants to invest in the company and get it back on track and kind of maintain some of the values of its founders, I think it's good for golf." Shackelford added of the year-long sale attempt, “It was almost a mystery. People were starting to ask, ‘What is going on here? Why is this happening?’" Meanwhile, he said he was "surprised at the timing" of the sale in that it was "so close" to TaylorMade's deal with McIlroy (“Morning Drive,” Golf Channel, 5/11).
