Mark King, the president and CEO of TaylorMade-adidas Golf, held a conference call on Monday to discuss his company's agreement to purchase Adams Golf. Here are some highlights, as well as the answer to the question many golfers immediately had upon learning the news.
1. Is Adams going to be absorbed by TaylorMade and disappear?
In a word: No. In fact, during a conference call on Monday, King said, "We believe that the best chance to continue the growth of Adams is to leave it there [in Plano, Texas] and operate it as an affiliate to our business." King went on to say that over the last 10 years TaylorMade has fully integrated other acquired companies but, "quite frankly we have struggled with those acquisitions to allow them to remain with an identity and the ability to compete in the marketplace."
As soon as the final regulatory and shareholder approvals for the deal are complete, a new president and CEO of Adams will be named. Chip Brewer, the company's former top executive, was named president and CEO of Callaway Golf on Feb. 27. However, King said that the new head of Adams won't necessarily be a TaylorMade executive.
"There is a potential candidate [within Adams Golf] that we're going to look at," King said. "We've got several candidates within the TaylorMade organization that have expressed interest, but I think that the most important thing is that we find the right person. Someone who is going to live in Plano, and somebody who is going to emotionally get attached to that business."
2. Why does TaylorMade want to buy Adams?
The golf industry is not growing, so these days it's all about market share. TaylorMade already sells more woods and irons than any other brand. The catagories within the market where King thinks his company can grow are in the game-improvement, senior and women's categories—three core areas where Adams focuses much of its attention.
Just over a minute into the conference call, King said, "We see ourselves as being for serious golfers, and when we talk about the voice of our company, it's directly at the zero- to 4-handicap players." He noted that Adams positions itself as being for mid- and higher-handicap players.
"I think a combination of our brand, TaylorMade, at the top of the pyramid, and the Adams brand in the middle- to high-handicap slot really allows us to compete in all segments for the golfer."
Another thing that made Adams appealing was its intellectual property. "I think it was very enticing for us," King said. "For a smaller company, they had really great ideas around technology."
If current products are any indication, some of those ideas could mesh well with TaylorMade innovations. Adams has featured woods and hybrids with channels carved into the sole and crown areas, like the Speedline F11, for a few seasons. TaylorMade has just released the new RocketBallz fairway woods and rescue clubs that also have a channel in the sole.
3. What does Adams Golf gain from the new relationship?
The deal gives Adams a chance to grow much bigger, and much faster, than it could have on its own.
According to King, about 90 percent of Adams' business is done inside North America, while TaylorMade does more than 60 percent of its business outside North America.
"Leveraging our infrastructure outside the United States in the near-term will give the Adams brand a really great opportunity to grow," King said.
Smaller companies that lack big budgets for marketing, research and development, and global supply chains are at a big competitive disadvantage.
"Companies like ours and our two or three big competitors have a lot of scale, a lot of size and a lot of marketing ability," Kind said. "So it's challenging, but it can certainly be done, but I think it's going to have to be done more on the niche basis than on a broad product line."