Adidas Finally Sells Golf Business For $425 Million

Adidas AG(ADR) ADDYY announced it has finally sold off its golf segment to KPS Capital Partners for $425 million. The deal is expected to close towards the end of 2017.

Adidas has been shopping its golf segment, which includes leading golf brand TaylorMade, along with Adams Golf and apparel company Ashworth, since early 2016.

While TaylorMade is the flagship brand and has a favorable position in the golf industry, the company was in disarray, losing up to $100 million per year according to the New York Post.

The deal is looks like a win-win for both parties. Adidas can focus on its burgeoning footwear business, while KPS Capital Partners was able to acquire a leading golf brand that does north of $500 million per year in revenues. By comparison, competitors Callaway Golf Co ELY and Acushnet Holdings Corp GOLF are valued at $1.21 billion and $1.47 billion, respectively.

'Huge Mistake'

In 2016, Adidas admitted it had made a "huge mistake" regarding its golf business. KPS Capital will have the opportunity to give TaylorMade new life in the industry, as it can focus on turning the business around, at a time when the big apparel giants had looked to get out of the golf equipment business.

Last year, Nike Inc NKE announced it would stop making golf equipment, which had been a struggling segment of the business, leaving its star endorsers Tiger Woods and Rory McIlroy to look elsewhere for golf equipment.

Where did they end up? TaylorMade.

McIlroy recently signed a $100 million contract with the company. Nike does continue to make golf apparel and shoes, which remains a more enticing segment of the sport.

"TaylorMade is a leading global golf brand with an exceptionally strong market position. 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 CEO Kasper Rorsted said. "Within our long-term strategy 'Creating the New', our focus is clearly on our core competencies in footwear and apparel and on our two major brands adidas and Reebok."

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