After months of speculation, Adidas announced on Wednesday that the company is seeking to sell its TaylorMade, Adams and Ashworth brands.
The company conducted a full review of its golf business in August, and even though TaylorMade sales rose 6% in the first quarter of 2016, Ashworth and Adams suffered double-digit losses, resulting in a net loss overall for Adidas.
“TaylorMade is a very viable business,” Adidas CEO Herber Hainer said in the press release. “However, we decided that now is the time to focus even more on our core strength in the athletic footwear and apparel market. With its leadership position in the industry and the turnaround plan gaining traction, which is clearly reflected in the top- and bottom-line improvements recorded in Q1 as well as recent market share gains, I am convinced that TaylorMade offers attractive growth opportunities in the future.”
What about TaylorMade’s stable of star golfers? ESPN buisness reporter Darren Rovell believes the big deals for the big names are secure.
According to Reuters, an acquisition might come from an unfamiliar source, with analysts predicting “Adidas might draw interest from firms in Asia or a financial investor rather than a rival such as Nike, Puma, Under Armour or Callaway Golf, which might be wary of increasing exposure to golf.”
Casey Alexander, Managing Director – Equity Research for Ladenburg Thalmann & Co., reports that “Early speculation will likely include Under Armour as a potential buyer of the TaylorMade Golf division if only because of the fit. UA has golf footwear and golf apparel and no equipment. UA also has a strong commitment to golf long term with endorsement contracts with leading players including Jordan Spieth.”
Alexander adds, “While we doubted that a sale of Adams Golf, a division within TaylorMade, could have taken place as no strategic buyers were interested and financial buyers would not have been able to extract Adams from within the TaylorMade operations, now financial buyers could be in play for TaylorMade as a whole including Adams. Basically, the only way to sell Adams Golf was to sell TaylorMade as a whole.”
Below is a podcast from January 2016 with TaylorMade CEO David Abeles: