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Equipment Report

    Adidas sells TaylorMade Golf to KPS Capital Partners for $425 million

  • KPS Capital Partners, LP is private equity firm headquartered in New York City. (Photo courtesy of TaylorMade)KPS Capital Partners, LP is private equity firm headquartered in New York City. (Photo courtesy of TaylorMade)

Roughly 24 hours after TaylorMade Golf unveiled Rory McIlroy as its newest staffer, parent company adidas announced it had reached a definitive agreement to sell TaylorMade, Adams Golf and Ashworth to KPS Capital Partners, LP for a total consideration of $425 million.

According to a release, around half of the agreed upon price will be paid in cash with the remainder to come in a combination of secured notes and contingent considerations. The transaction is expected to be completed later in 2017 following customary closing conditions.

The release went on to state that due to the transaction, "adidas will record a nonoperational negative P&L impact in the high-double-digit to low-triple-digit million euro range, which will be reported in discontinued operations as part of the company’s 2017 results."

KPS Capital Partners, LP is private equity firm headquartered in New York City and was founded by Eugene Keilin, Michael Psaros and David Shapiro in 1991. The firm's main focus is investing in a range of manufacturing industries, including basic materials, branded consumer, healthcare and luxury products, automotive parts, capital equipment and general manufacturing.

“TaylorMade is a leading global golf brand with an exceptionally strong market position," said Kasper Rorsted, CEO of adidas AG. "We would like to thank all TaylorMade employees for their many contributions to our company and wish them all the best for a successful future under their new ownership. At the same time, we welcome all adidas Golf employees who will be integrated into our adidas Heartbeat Sports Business Unit."

Adidas noted the divestiture of its golf hardware division had already been reflected in the company's long-term outlook that was announced in March. The company hopes to record net sales of €25 billion to €27 billion and an implied operating margin of 11 percent by 2020.

Sales talks regarding TaylorMade, Adams Golf and Ashworth were announced in August 2015, but it wasn't until April 2016 that Adidas confirmed it had decided "to enter into concrete negotiations with interested parties"

TaylorMade has enjoyed a long and successful history as one of the top manufacturers in the golf industry. Once a part of Salomon, a French ski and boot manufacturer, TaylorMade became a part of adidas when Salomon was acquired for an estimated $1.4 billion in 1997. TaylorMade expanded the brand in 2008 and 2012 by acquiring Adams Golf ($70 million) and Ashworth ($73 million).

Even with news of a potential sale looming for the last year-plus, TaylorMade has continued to bolster and reinforce its TOUR staff, signing McIlroy and Jon Rahm to long-term equipment deals; Dustin Johnson and Jason Day agreed to re-sign last year as well.

TaylorMade and KPS Capital Partners declined to comment on the sale.