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Fortune Selling Acushnet

SuperStroke
heard today that the two most likely buyers are............NIKE and TM/Adidas ...... - not sure how accurate the reporting was - but it was interesting
 
ghsace said:
heard today that the two most likely buyers are............NIKE and TM/Adidas ...... - not sure how accurate the reporting was - but it was interesting
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Nike.....really. Hard to believe..........
 
ghsace said:
I thought the same thing - BUT if there is any company with the $$$ to pull it off....
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You should read this. This is from December 9, 2010;

The news that Fortune Brands is looking to sell its golf division, Acushnet Golf, has sparked rampant speculation about who or what entity might swoop in to purchase one of the most successful golf companies in the history of the game.

Acushnet, with an estimated $1 billion in annual sales, encompasses the Titleist, FootJoy and Pinnacle brands and is home to the indisputable leaders in golf balls, golf footwear and golf gloves, and a legitimate force in just about every other golf equipment category that matters. It is a mighty attractive package, given its leadership positions in several categories, its dominance on the professional tours and a streamlined, but revitalized, club business that owns an unmatched presence at on-course golf shops nationwide. But despite the speculation running rampant across the blogosphere, what's not likely to happen is Acushnet being purchased by another golf company. Here's why:

First of all, the announcement by Fortune Brands doesn't necessarily guarantee that it will sell Acushnet Golf. It could simply leave it as a separate entity, which is the technical meaning of "spin off." That certainly makes it easier to sell Acushnet, which is the primary motivation of the corporate raider Bill Ackman, who owns 11 percent of Fortune Brands shares and initiated the Fortune Brands split-up talk two months ago. Still, the selling of Acushnet to another golf company, as appealing a prize as it might be, isn't likely.

First up, the price. This isn't going to be a situation like when Callaway purchased Top-Flite in 2003 for what amounted to a 1987 Scirocco with four decent snow tires. Top-Flite was a dying brand with only one meaningful asset: Its golf-ball patent portfolio. Callaway wanted it, bought it and used it well, but mostly because it didn't cost that much ($179 million). The swallowing of Cleveland by Japanese sports (and rubber) giant Sumitomo two years ago for $132.5 million was even less of an event. Acushnet Golf is more than a mouthful for several reasons. Its Titleist brand is arguably the most important brand in golf. It exudes a status that transcends the technological sophistication of its products.

Among golf's intelligentsia, it simply matters more than any other brand. But more importantly, Titleist has real profits and real dominance in the marketplace. Its EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is approximately $120 million and historically sporting goods transaction multiples are between six and eight times EBITDA. Acushnet being an industry leader would seem to command the high end of that so let's start the bidding at $1 billion. Or possibly beyond.

Those are real dollars that could be better spent on your own business, whether you're Nike, Srixon, TaylorMade or Callaway (Nike and Callaway were contacted for this story but declined comment), so it is highly unlikely a golf company is going to spend that money to buy a brand whose leadership positions they've all been eating away at over the last five years. Plus, you're probably talking at least a decade to make up your investment, which in the 21st century might as well be an eon. In other words, this is an unacceptable amount of time to wait for the check to clear.

History also tells us this scenario is unlikely. In the last 25 years there have been 15 notable acquisitions in the golf industry. In 12 of the 15 cases, the acquired company and its brands were soon eviscerated. Not a promising history of sales and profit retention. In other words, there's only so many Callaway/Odyssey and Acushnet/FootJoy deals that work. Financially and, in some cases, culturally, these types of incestuous acquisitions usually don't work. ​





 
HoosierGolfer said:
You should read this. This is from December 9, 2010;

The news that Fortune Brands is looking to sell its golf division, Acushnet Golf, has sparked rampant speculation about who or what entity might swoop in to purchase one of the most successful golf companies in the history of the game.

Acushnet, with an estimated $1 billion in annual sales, encompasses the Titleist, FootJoy and Pinnacle brands and is home to the indisputable leaders in golf balls, golf footwear and golf gloves, and a legitimate force in just about every other golf equipment category that matters. It is a mighty attractive package, given its leadership positions in several categories, its dominance on the professional tours and a streamlined, but revitalized, club business that owns an unmatched presence at on-course golf shops nationwide. But despite the speculation running rampant across the blogosphere, what's not likely to happen is Acushnet being purchased by another golf company. Here's why:

First of all, the announcement by Fortune Brands doesn't necessarily guarantee that it will sell Acushnet Golf. It could simply leave it as a separate entity, which is the technical meaning of "spin off." That certainly makes it easier to sell Acushnet, which is the primary motivation of the corporate raider Bill Ackman, who owns 11 percent of Fortune Brands shares and initiated the Fortune Brands split-up talk two months ago. Still, the selling of Acushnet to another golf company, as appealing a prize as it might be, isn't likely.

First up, the price. This isn't going to be a situation like when Callaway purchased Top-Flite in 2003 for what amounted to a 1987 Scirocco with four decent snow tires. Top-Flite was a dying brand with only one meaningful asset: Its golf-ball patent portfolio. Callaway wanted it, bought it and used it well, but mostly because it didn't cost that much ($179 million). The swallowing of Cleveland by Japanese sports (and rubber) giant Sumitomo two years ago for $132.5 million was even less of an event. Acushnet Golf is more than a mouthful for several reasons. Its Titleist brand is arguably the most important brand in golf. It exudes a status that transcends the technological sophistication of its products.

Among golf's intelligentsia, it simply matters more than any other brand. But more importantly, Titleist has real profits and real dominance in the marketplace. Its EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is approximately $120 million and historically sporting goods transaction multiples are between six and eight times EBITDA. Acushnet being an industry leader would seem to command the high end of that so let's start the bidding at $1 billion. Or possibly beyond.

Those are real dollars that could be better spent on your own business, whether you're Nike, Srixon, TaylorMade or Callaway (Nike and Callaway were contacted for this story but declined comment), so it is highly unlikely a golf company is going to spend that money to buy a brand whose leadership positions they've all been eating away at over the last five years. Plus, you're probably talking at least a decade to make up your investment, which in the 21st century might as well be an eon. In other words, this is an unacceptable amount of time to wait for the check to clear.

History also tells us this scenario is unlikely. In the last 25 years there have been 15 notable acquisitions in the golf industry. In 12 of the 15 cases, the acquired company and its brands were soon eviscerated. Not a promising history of sales and profit retention. In other words, there's only so many Callaway/Odyssey and Acushnet/FootJoy deals that work. Financially and, in some cases, culturally, these types of incestuous acquisitions usually don't work. ​





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Excellent post as always.... completely agree with you....The Wall Street Journal was the post that I saw touting it - I think it was a reproduction of an earlier article in the TWJ. Thought it was interesting either way... that the Nike rumor wont go away....
 
I think there are too many antitrust issues for any large golf OEM to get involved. I'm guessing it will sell at some point but to who knows who.
 
Since Nike already has a golf department, why would they want to buy Acushnet? Same with Adidas?
 
Could be the same reason Nike bought Converse....
 
polarisdude94 said:
Since Nike already has a golf department, why would they want to buy Acushnet? Same with Adidas?
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Marketing and the power of the Titleist, Footjoy, Vokey and Cameron name. Titleist is still a HUGE force in the golf industry and any company would kill to own them. It will be interesting to see how this all plays out.
 
polarisdude94 said:
Since Nike already has a golf department, why would they want to buy Acushnet? Same with Adidas?
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Nike has never indicated as far as I know that they were interested. Internet rumor run amuck. With that said, all the OEM's that are making and selling balls would love to have the ProV kicked down a notch. Titleist ball sales are huge. A new kid on the block would love to have the Titleist ball technology, but the price could be too much for most.
 
I still think when Fortune Brands sells Acushnet Golf, it will be to another large parent company with many things under it umbrella, but highly unlikely to be a golf only OEM. The price is just to high along with the reasons already pointed out. It will sell at some point.
 
OFFICIAL: Acushnet has been sold to Fila! I did not see that one coming.

http://www.thestreet.com/story/1112...t-to-sell-acushnet-company-golf-business.html

Fortune Brands, Inc. (NYSE:FO) today announced a definitive agreement for the sale of its Acushnet Company golf business, featuring the iconic Titleist and FootJoy brands, to a group led by Fila Korea Ltd., the owner of the Fila brand globally, and Mirae Asset Private Equity, the largest private equity firm in Korea. The purchase price is $1.225 billion in cash. Fortune Brands estimates it will realize net proceeds of approximately $1.1 billion after taxes and expenses.

Acushnet is the leading and most profitable golf equipment company in the world. Titleist is the #1 ball in golf and a leader in high-performance golf clubs. FootJoy is the #1 shoe and glove in golf and a leader in performance outerwear. Net sales exceeded $1.2 billion in 2010, with nearly half of revenues generated in markets outside the United States. Operating income before charges was $80 million in 2010, and operating income on a GAAP basis was $89 million.

Established in Italy in 1911, Fila is a leading sport and leisure footwear and apparel brand that is distributed worldwide. The group led by Fila Korea and Mirae also includes the National Pension Service of Korea, the fourth largest pension fund in the world, and Korea Development Bank, Korea’s largest government-owned bank.

“This transaction is a very important milestone as we execute our proposed plan to separate our three strong businesses for the purpose of maximizing long-term value for our shareholders,” said Bruce Carbonari, chairman and chief executive officer of Fortune Brands. “Not surprisingly, the sale process for Acushnet generated broad interest from a range of prospective buyers and resulted in this agreement that reflects the superior performance and prospects of the business. The proceeds from this sale will strengthen Fortune Brands’ balance sheet and support strong capital structures for both Beam and Fortune Brands Home & Security as they look to the prospect of competing as independent companies later this year.
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Wow... didnt see that one coming. Nice find, Darren Rovell just tweeted it too. Fortune Brands got a good deal at $1.23B seeing as many insiders predicted the valuation to be $800M - $1B.
 
hmm Cobra to Puma, Titleist to Fila.. the footwear companies are taking over...
 
Didn't see that one coming at all either. Just got the email. Interesting.
 
Morning Drive just said that Wally Uihlein will remain CEO, sounds like nothing big is going to change at Acushnet for the short term.
 
As far as I can tell and read the company is going to stay pretty much in tact with Wally running it. Hope this continues. This is a great pick up for Fila considering most insiders state that golf in Asia will see a 40%+ growth in the coming years.
 
Read the news as well on the net. I scanned over TCC and didn't see much being said there. I'm sure the collectors are happy that there will no changes for their main man. It makes sense as none of the major OEM's could do a deal and not end up in some big court battle with the other OEM's.
 
jnug said:
This smacks of a big private equity deal in the making although it will take some time and some M&A lawyers will make a good deal of money in the process.

I don’t see a strategic acquisition here unless it comes from an Asian based corporation or holding company that has money and already owns one of the smaller golf brands that has a decent Asian footprint. I would start looking at the ownership compositions of some of the Asian golf brands to see what sits behind the banner over the door.

I have always thought that whatever deal happens once it happens here will have an effort to grow share in Asia as one of the foundation blocks of the acquirer’s strategy.
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A the winner of best speculation goes to jnug.
 
I just got the official e-mail. I wonder if they are going to rebrand some of the company.
 
This is the email I received from Titleist (my bold):

Dear Sean:

As you may recall, we reached out to you back in December 2010 to provide you with an update surrounding the news that Fortune Brands, the parent company of the Acushnet Company, had approved a plan for the sale of the Acushnet Company.

Earlier today, Fortune Brands announced that it has signed an agreement for the sale of Acushnet Company to a consortium led by Fila Korea Ltd., the owner of the Fila brand globally, and Mirae Asset Private Equity, the largest private equity firm in Korea.

As part of the announcement it was communicated that Acushnet's worldwide headquarters will remain in Fairhaven, Mass., and Fila Korea and Mirae have expressed their intent to maintain Acushnet as a standalone operation and keep the Acushnet management team in place.

Together, with our new owners, our mission remains unchanged, and that is to continue to perpetuate and grow the Titleist and the FootJoy brands as the product category leaders in quality and performance.

To provide you with some additional insight and details surrounding the announcement we have included links to a blog post and press release below.

All of us at Team Titleist truly appreciate your continued support as your enthusiasm for the Titleist brand has helped us build upon our leadership position in the industry.

We look forward to this next chapter in the storied success of Titleist and we are excited to have all of our valued Team Titleist members on-board for the journey.
 
That Sucks.
 
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