German sportswear maker Adidas (ADSGn.DE) is selling its golf equipment and clothing brands TaylorMade, Adams Golf and Ashworth to private equity firm KPS Capital Partners, taking a hit to its earnings.
Adidas will get $425 million, around half of which will be paid in cash and the rest in secured notes and contingent considerations, the company said in a statement on Wednesday.
It added that following the sale, which it expects to conclude later this year, it will book a charge in the high double-digit to low triple-digit millions of euros range.
Adidas had put the loss-making business up for sale last year to focus on shoes and clothing. After peaking around 2000, when Tiger Woods was in his prime, the number of people playing golf in the United States, which accounts for half the global golf market, has fallen sharply.
Adidas bought TaylorMade in 1997 as part of its $1.4 billion acquisition of French skiing label Salomon, developing it into the world’s biggest supplier of golf drivers. It bought smaller Ashworth in 2008 and Adams four years later.
But the golf business has been in decline for years. In 2016, it saw sales decrease 1 percent to 892 million euros, accounting for 5 percent of group sales and down by a third from a peak of 1.34 billion euros in 2012. It continued to be loss-making last year.
The part of the business Adidas is selling accounts for 60 percent of total golf-related revenue. Separately, it has put its ice hockey brand CCM Hockey on the block.
While several other private equity groups showed an interest, rivals such as Nike (NKE.N), Puma (PRTP.PA), Under Armour (UAA.N) and Callaway Golf (ELY.N) decided not to take on additional brands, sources familiar with the sale process said.
Guggenheim advised Adidas on the deal, while Deutsche Bank advised KPS.
Source: Reuters.com