Private equity firm KPS Capital Partners LP is purchasing TaylorMade Golf Co., a U.S. manufacturer of golf clubs and accessories, from sports retail giant Adidas AG. The deal, which is valued at $425 million, welcomes TaylorMade as the only sportswear brand to KPS’ portfolio.
TaylorMade designs “high-performance” golf equipment, including: drivers, wedges, irons, golf balls, putters, golf bags, gloves, hats and visors, apparel, and travel gear. The Carlsbad, California-based target distributes its products using the Adams, TaylorMade and Ashworth brands. The target is heavily involved in the PGA Tour with a strong portfolio of athletes that features Tiger Woods and Sergio Garcia. The acquisition comes one day after TaylorMade signed Rory McIlroy to its roster in a $100 million equipment deal. As part of the deal, McIlroy will sport the brand's full bag, staff bag, and its golf ball. McIlroy's apparel and footwear will remain with Nike, as he recently signed a contract extension.
In 2015, Adidas hired an investment bank to explore options for TaylorMade as the company saw a decline in revenue. The move to divest the golf equipment brand comes as Adidas looks to streamline its business and concentrate on shoes for running, soccer and other sports such as basketball. In March 2015, Adidas unveiled a new strategy in order to spur growth by: pairing its product line, shipping sneakers faster, and spending mostly in six trendy cities where sales are concentrated. New York, London, Paris and Shanghai are among those cities. Adidas has made several moves over recent years to close the sales and market share gap with Nike Inc. (NYSE: NKE). Nike exited the equipment business in August 2016. Sheppard Mullin Richter & Hampton LLP is serving as legal counsel to Adidas on the deal.
KPS is a New York-based private equity firm with more than $5.7 billion in assets under management. The firm looks to make control equity investments in specialty manufacturing companies and to collaborate with major industrial and service unions to sponsor transactions. The firm recently acquired global steel abrasive manufacturer WHA Holding SAS from a group of investors. In November 2016, KPS sold bottle packaging company Anchor Glass Container Corp. to CVC Capital. The PE firm initially backed Anchor Glass in 2014, growing the target’s business with a 50 percent profit increase. Raquel Palmer, a partner at KPS, was recognized as one of The Most Influential Women in Mid-Market M&A.
Lifestyle and sports-related brands have seen a steady interest from dealmakers and private equity firms. Similar deals include: Falconhead Capital’s deal to acquire Kwik Tek, a maker of Airhead wakeboards and other outdoor branded products; Peak Rock Capital’s purchase of Do Outdoors Inc., the owner of fishing product manufacturer Lew’s Fishing; Cabela’s Inc.’s (NYSE: CAB) agreement to purchase Bass Pro Shops for $5.5 billion; and Bass Pro Group LLC’s deal to acquire Fishing Holdings LLC from Platinum Equity Partners. In 2015, Norwest Equity Partners picked up a stake in ski and snowboard equipment retailer Christy Sports and Johnson Outdoors said it will add underwater watch maker Seabear.