Finnish sporting goods conglomerate Amer Sports – owner of Wilson Sporting Goods, among others – is in the process of being sold to a Chinese group led by athletic apparel giant ANTA Sports Products, LTD, for an estimated $5.2 billion.
ANTA announced its interest in acquiring Amer in September, and in early December, the Amer Sports Board of Directors unanimously agreed to recommend its shareholders accept ANTA’s offer, which represented a 39% premium over Amer’s early September stock price. Amer share prices jumped immediately after ANTA made its intentions known in September, nearly 20% in one day – the largest jump in its history.
In addition to ANTA, which is China’s largest athletic apparel manufacturer, the buying group also includes Chinese internet giant Tencent Holdings and billionaire Chip Wilson, the founder of Lululemon Athletica.
Facts of the Deal
In a mailing to shareholders last month, Amer said the ANTA group plans to invest time and money to expand Amer’s businesses globally, especially in Asia. Amer will have access to ANTA’s distribution network, R&D resources, and manufacturing and sourcing capabilities.
Under the agreement, Amer will continue to operate as an independent entity with an independent Board of Directors. Current Amer leadership has been invited to stay on under the new ownership.
Along with Wilson Sporting Goods, Amer owns outdoor sports brands Louisville Slugger and DeMarini baseball bats, Atomic and Armada ski equipment, Salomon and Arc’teryx hiking and mountaineering gear, Mavic and ENVE cycling gear and Precor fitness equipment. Amer has owned Wilson Sporting Goods since the late 1980’s. Bloomberg reported in December that Amer made for an attractive target as the next two Olympic games will be coming to Asia (2020 Summer games in Tokyo, 2022 Winter games in Beijing).
ANTA was established in 1991, specializing in footwear, apparel, and accessories, and went public in 2007, with former Houston Rockets owner Leslie Lee Alexander as a key investor. Current and former NBA stars Klay Thompson, Gordon Hayward, Rajon Rondo, and Kevin Garnett are ANTA athletes, as is boxer Manny Pacquiao.
What Does This Mean For Wilson Golf?
In the short term, probably nothing. Wilson was able to sign Gary Woodland to a sponsorship deal after the agreement was announced, so clearly there’s no spending moratorium until the deal is finalized, and from all outward signs it has been business as usual in Chicago.
Wilson won’t be making any statements until the sale is finalized – which should be sometime in March – and the thinking here is Wilson Sporting Goods is a key component to the acquisition. Wilson is a strong player in baseball, basketball, and tennis – all global sports with tremendous market potential in China and the rest of Asia. The Asian golf market is huge, and market research shows China is a ripe and growing market for golf equipment. A report by the R&A last year indicates 32% of the world’s golf course projects are in Asia. Wilson Golf has not been active in the Asian market recently, but this sale could open up significant growth opportunities.
There aren’t any similarities between this deal and the recent TaylorMade sale by adidas to the capital group KPS. First off, adidas actively sought a buyer for TaylorMade, and KPS purchased only TaylorMade – there were no other major elements to the deal (the Adams and Ashworth brands were included in the sale, but by purchase time had been diminished to the point where the assets were little more than logos). In that case the capital group bought what amounted to an undervalued asset at a relative bargain. Depending on the group, the goal then would be to pretty up and P&L and Balance Sheet ASAP and then sell it off for a quick profit, or build up the asset over time, making money along the way before selling it at an even bigger profit.
In the case of Amer Sports, it wasn’t for sale. The ANTA group simply made the proverbial offer they couldn’t refuse and purchased the the whole thing lock, stock and barrel, at a premium price, adding a wide variety of equipment to its already strong portfolio of apparel, footwear and accessories. For those worried about lousy or low-quality Chinese manufacturing, that’s an outdated narrative, at best. It’s a fair bet that most of what Amer sells – including Wilson golf equipment (and nearly all golf equipment, for that matter) – is manufactured to some degree in China already.
So in the long term, the deal would appear to potentially be good news for Wilson Golf but, as is the case with global business, one never knows.