TaylorMade Sold!
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TaylorMade Sold!

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TaylorMade Sold!

TaylorMade Sold – Key Takeaways:

  • Breaking News: TaylorMade sold to a Korean Private Equity firm for $1.6 billion.
  • KPS Financial bought TaylorMade from adidas in 2017 for $425 million.
  • Sale comes amidst reports of the highest industry-wide Q1 golf equipment sales on record.

We’re hearing rumblings this morning the rumored sale of TaylorMade is now a reality. Today’s Korea Economic Daily Global Edition is reporting that TaylorMade has been sold to Centroid Investment Partners, a Korean Private Equity firm for $1.6 billion.

The newspaper reports it is the largest-ever acquisition in the golf industry. The deal is expected to be finalized in July.

$1.6 billion is a hefty price tag. KPS Financial LP, a New York-based private equity firm, purchased TaylorMade, Adams and Ashworth from adidas four years ago for $425 million. At the time, it was believed KPS would streamline and restructure TaylorMade with an eye towards selling it at a tidy profit.

We’d say $1.6 billion – roughly four times the original investment – qualifies as mission accomplished.

TaylorMade Sold

TaylorMade Sold: Four Years Under KPS

Reports that TaylorMade was on the block first surfaced this past February. The New York Times reported the asking price would be in the $2 billion range.

When KPS purchased TaylorMade in May of 2017, golf’s former top-dog was in distress. That explained the relative bargain-basement pricetag KPS paid. TaylorMade has recreated itself during the KPS stewardship, completely shedding the “new driver every six months” image. The company has established the P-series of forged performance irons, as well as the M and later the SIM lines of game improvement irons and metal woods.

TaylorMade is inarguably on firmer financial ground compared to four years ago. The company has maintained one-year product cycles on its GI and metal woods lines, and two-year cycles on its premium iron lines, wedges and balls. And while its Tour staff has thinned a bit, TaylorMade still includes Dustin Johnson, Tiger Woods and Rory McIlroy in its stable.

TaylorMade Sold

The New Owners

According to the Korea Economic Daily, Centroid Investment Partners is one of  South Korea’s lesser-known private equity firms. It reportedly beat out four other unidentified bidders to acquire TaylorMade.

Centroid Investment is only six years old and is involved in fabric and textiles businesses in Asia. Last year it purchased the South Springs Country Club in South Korea for a reported $153 million.

The TaylorMade deal is the largest purchase and sale in golf since Fila Korea Ltd. bought Acushnet in 2011 for $1.3 billion.

$1.6 BILLION?

At first blush, the $1.6 billion price tag for TaylorMade is a bit of a shocker. Acushnet sold for $1.3 billion a decade ago, but that company also has a thriving shoe and apparel business and is the world’s largest golf ball maker. TaylorMade is clubs, balls and accessories only.

But thanks to COVID, golf is hotter now than it’s ever been. Golf equipment sales have been setting sales records for three straight quarters. Golf Datatech is reporting U.S. retail sales were up 72 percent in Q1 of 2021, compared to last year. Compared to Q1 of 2019, sales this year are still up a remarkable 49%. Golf Datatech says this year’s sales are the highest Q1 on record.

In addition, the National Golf Foundation is reporting rounds in the U.S. were up 24 percent in Q1.

Three taylormade P770 Irons that will be Reviewed

On top of that, industry leaders Acushnet and Callaway are reporting huge first-quarter sales results. Acushnet posted $581 million in worldwide sales, with a net profit of $85 million. Callaway also posted record sales in Q1 at $652 million with an on-paper net income of $272 million. However, a large chunk of that is an accounting write-up related to the Topgolf merger. The actual cash profit due to operations is a still-respectable $76 million.

The Korea Economic Daily reports the $1.6 billion sales price represents 12 times TaylorMade’s projected 2021 EBIDTA (Earnings Before Interest, Depreciation, Taxes and Amortization) of $139 million. By contrast, Callaway predicts its 2021 EBIDTA will exceed the $211 million it reached in 2019.

TaylorMade Sold: What Does It All Mean?

Obviously, it means KPS did its job by righting the TaylorMade ship. And then it struck while the iron was hot. Centroid Investment is paying top-dollar, which indicates TaylorMade has been turning solid profits over the past four years. $1.6 billion also says Centroid is bullish on the worldwide golf market. It clearly believes TaylorMade is primed for growth not only in North America but also in the fast-growing Asian market.

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John Barba

John Barba

John Barba

John is an aging, yet avid golfer, writer, 6-point-something handicapper living back home in New England after a 22-year exile in Minnesota. He loves telling stories, writing about golf and golf travel, and enjoys classic golf equipment. “The only thing a golfer needs is more daylight.” - BenHogan

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      scott

      3 years ago

      Manufactured in China owned by Korea and sold to American’s .

      Reply

      Scott

      3 years ago

      Yeah just like just about every other golf company. The only major OEMs that have American ownership are Hogan, Ping, PXG, Tour Edge. Callaway is publicly traded. It is rare for anything anymore to be completely assembled in the USA using American made parts. Rare. It takes someone who doesn’t care about maximizing profit, which is probably even more rare.

      Reply

      Jay

      3 years ago

      Scott,
      You should do some research and find out the facts before posting false statements here, or anywhere else.
      Titleist, the industry leader in golf ball sales manufactures the majority of all Titleist balls, and all Pinnacle balls in America. Acushnet Company, the parent company of Titleist & Footjoy owns and operates two production facilities in Massachusettes, and a third plant also owned and operated by Titleist is where the custom logo and personalized ordered balls are printed, all three plants, the packaging & distribution center, and worldwide corporate headquarters are all within a 15-20 mile radius with approximately 2,000 associates employed. The only balls not made in America are made in another ball plant in Thailand, it too is owned and operated by Titleist, and it was built there when expansion of the other ball plants wasn’t possible, and for logistical purposes. The balls manufactured in Thailand by Titleist associates are shipped throughout Asia and Europe.

      Trusty rusty

      3 years ago

      any guess who the other 4 bidders were? ( it was reported there were 4 other entities making offers)

      If I were to guess …. Nike*, UA* and the other two would be conglomerates or Capital investment companies

      * both could benefit from a presence in golf, every major brand has a clothing line association.

      Reply

      Andrew

      3 years ago

      I actually think this is good new for TM fans. When a company buys low, they are trying to break up, build up or rebrand the company to make a profit..When a company buys high, as just occurred, they will be looking to continue to innovate and grow the brand to validate the purchase price. In my humble opinion, any investment in golf is good for the game.

      Reply

      Rob

      3 years ago

      The article said Taylormade just did golf clubs, balls and accessories. They actually sell apparel as well, doesn’t matter if it is popular like Footjoy, Nike or Adidas. Besides different brands are popular in Asia and Europe compared to America.

      Reply

      D. Lee

      3 years ago

      The fact that this company is Korean is totally irrevelant. Would we have these comments if it was American? This is purely a financial investment, and has nothing to do with golf/sports. They will stay out of day-to-day management – TM is doing more than OK so far – and sit back and continue to collect the profits.

      Reply

      Bill

      3 years ago

      Wow, didn’t see that coming. But, considering Callaway’s recent acquisition and how HUGE golf is in Korea, not that surprised. I suspect they will do their best to maintain/grow the product lines – and make the transition smooth so as not to lose key personnel..

      Reply

      Henry Lee

      3 years ago

      All good! If someone wants to overpay, it’s their opportunity or problem. I thought I overpaid my home 3 years ago, but, now looking back, it was a good investment. Besides, these PE companies have better financial ppl than most of readers on this web site.

      This story reminds me of when Pebble Beach was sold to Japanese company.

      Reply

      Trusty Rusty

      3 years ago

      My how people forget! This is great for TaylorMade and great for golf.

      Where were your silly opinions 9 years ago? Still negative?

      On May 20, 2011 it was announced that a Korean group associated with Fila Korea, Ltd. and Mirae Asset Private Equity would purchase Acushnet for $1.23 billion

      Reply

      Harris

      3 years ago

      Funny how people react that TM will deteriorate after the acquisition. Was that the case on Titleist when they were acquired in 2017? I am surprised at the price tag but don’t think it will change much. They will probably expand their line for sure with possibly its own clothing line just like Titleist now has clothing line in S. Korea.

      Reply

      Imafitter

      3 years ago

      Having come from a US company purchased by a Korean company, I wish good luck to TM employees. Meeting with the president and top Korean management, these people are the most arrogant & disgusting “people” I’ve ever met. By the way, this “private equity firm”, like ALL companies in Korea, is controlled by the Korean government. When the company president is speaking to you and looking at the floor, you know the contempt he has for you. Disgusting.

      Reply

      Scott

      3 years ago

      With all due respect, GTFOH

      Reply

      LABillyboy

      3 years ago

      Seems reasonable given the growth in the golf market. 2 steps free of Adidas now they should enter high margin apparel and consumables like gloves and shoes. The brand is solid with great expansion potential. Critics have valid points, Centroid will have to add value to grow the top line or they will just sit where they are at 12 X EBIDTA. Getting into high margin categories could accomplish that while delivering bottom line growth as well.

      Reply

      Bob

      3 years ago

      I am curious to see if the new owners will pay players to use their driver.

      Reply

      wayne

      3 years ago

      I see Taylormade in the next 5 years to go the way of Nike golf..
      I dont think now that they were sold they will last very much longer.
      They will have to up date their products to be world class. They are no way that now, they make such inferior golf equipment now. I a surprised anyone buys Taylormade products

      Reply

      photopro

      3 years ago

      Apparently a lot of golfers don’t think the way you do judging by their driver sales and innovations. Even if the innovations are just juiced up from the previous years and only eck out 1 yard per year, they are still the longest, if not one of the longest off the stock drivers you can buy. Innovation for all makers is a challenge as they all have come so far.

      Reply

      Subpar

      3 years ago

      What? You make no sense. They have arguably the strongest team in golf, their last two driver releases are the highest selling, and highest performing. People are gravitating more and more to theTP5/X, extreme success with the spider, a consistently sold out limited release platform, and an extremely successful iron line up. Are you serious? Lol

      Reply

      Jay

      3 years ago

      Subpart,
      You should check sales numbers, the TP5 & TP5X are decent balls, but they’re not even close to Pro V1 & Pro V1x, Titleist sales are more than all other premium balls combined.
      Also, if you look at the PGA Tour, LPGA, Korn Ferry Tour, The Senior your, college golf, and other aatuer tours, Titleist is played by 60% to 80% of all players every week.

      Bill

      3 years ago

      Wrong take here, Wayne. Missed the mark this time.

      Reply

      Trusty rusty

      3 years ago

      Wayne, go back and re-hit at the tee box, your comment is lost and way out of bounds. Where do you get your information, sheesh

      Reply

      Mike

      3 years ago

      Is this an April fool’s day post? From my friends in the retail golf business, TaylorMade owns the under 40 market. Some of their models, just like all the OEMs, are outstanding. I never thought I’d play any TaylorMade clubs but I have three hybrids in my bag and I love them.

      Reply

      Jay

      3 years ago

      Wayne,
      Do you even have a clue? TaylorMade make great drivers & fairway woods, they’re not #1 as far as being played on the PGA Tour, Titleist has the #1 spot right now in drivers being used on your, and if anyone doubts that, just look it up and see for yourself.

      Reply

      Jonathan

      3 years ago

      Interesting. Agree that new PE firm overpaid, but you have to realize that in Korea, golf is viewed as a luxury good and they are quite fanatical about the game. I follow several golfers and golf “influencers” in Korea and they have had a big presence with promoting South Springs Country Club (new Taylormade owners also own this golf course). Seems like they’re on the right track, even if they overpaid a bit.

      Reply

      Paul O'Neil

      3 years ago

      When they bought the company for $425 million in 2017, they would have levered it 3 to 1 – so approx. $105 million in equity and $320 million in debt. The sale for $1.6 billion minus paying back the debt, with interest, let’s guess $400 million in total, means they netted $1.2 billion to the equity investors – so they made 12 X their investment in 4 years.

      Reply

      Robert

      3 years ago

      Yeah, not the time to buy right now. The last years numbers are totally inflated due to people getting checks from the government during COVID. Record sales are because of that. Once this last payment runs out, it will fall back to 2018/19 numbers. Still profitable, but not as good as the last year.

      Reply

      Richard

      3 years ago

      I bought new equipment last year, but I didn’t get a COVID check. So did many of my friends. I doubt that those who did qualify to get a COVID check spent it on things like golf clubs. Plus, $300 doesn’t buy you much anymore in new clubs. Maybe a fairway wood or a putter.

      Reply

      Robert

      3 years ago

      I’m not talking about the unemployment checks. The 3 stimulus checks that went to everyone that makes less than $75,000 and provided $1,400 with no dependents and doubles for every dependent you have. Places here had days where they made 3-4x the amount they normally do. Their top 10 sales days are all within the last year

      James Chaiser

      3 years ago

      Ricky who he still plays golf? There are more hot LPGA players then Paige who ever.

      Reply

      James

      3 years ago

      Cool comment bro

      Reply

      Tim

      3 years ago

      hello $55 / Dzn TP5’s and $800 SIM 3 drivers

      Reply

      Paul Vicary

      3 years ago

      KPS is and has been a class organization from the outset. They accomplished all they set out to do and more. Great people. Great work ethic and certainly a focus on the customer. $1.6B fair given the value plus Q1 numbers. Hope new investors don’t blow up the infrastructure.

      Reply

      JD

      3 years ago

      I would disagree that they have completely shed the “new driver every six months” image,

      Reply

      Chris Aisenbrey

      3 years ago

      $1.6B…WOW. I wonder what the new club release cycle will be – every 6 months?

      Reply

      Garrett Donohue

      3 years ago

      Every 6 weeks

      Reply

      Rob

      3 years ago

      The article said Taylormade just did golf clubs, balls and accessories. They actually sell apparel as well, doesn’t matter if it is popular like Footjoy, Nike or Adidas. Besides different brands are popular in Asia and Europe compared to America.

      Reply

      Geoffrey Hochenstein

      3 years ago

      Looks like somebody overpaid as the global economy is about to head into a tailspin.

      Reply

      Richard

      3 years ago

      So soon? We just had a global economy tailspin last year.

      Reply

      Daniel Freshley

      3 years ago

      Incredible sale price, but not a surprise. I would look for a big push in all overseas markets for TM as well in Adams (DTC currently) and Ashworth, which will put the new ownership group in the highly profitable soft goods side of the business

      Reply

      Rob

      3 years ago

      Taylormade does sell apparel too

      Reply

      Bill

      3 years ago

      They may sell some logoed shirts, 1/4 zips, hats etc, but they aren’t a player in the apparel biz like adidas, FJ, Polo, UA, etc

      Reply

      Gabriel

      3 years ago

      WOW simply WOW
      was expecting them to sell it but NEVER over 1 billion. And they are finance professional, I probably missed something somewhere…

      Reply

      JasonA

      3 years ago

      I see a whole raft of Taylormade ( but not actually tailor made ;-) kit coming out.

      They’ll probably sign Ricky Fowler and Paige Spiranac

      Reply

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