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M&As

Korean PEF clinches $1.7 bn TaylorMade Golf acquisition

By May 11, 2021 (Gmt+09:00)

Courtesy of TaylorMade Golf
Courtesy of TaylorMade Golf


South Korea's lesser-known private equity firm Centroid Investment Partners has acquired US sports equipment manufacturing firm TaylorMade Golf Co. for 1.8 trillion won ($1.7 billion), marking the largest-ever acquisition in the golf goods industry.

The cross-border transaction became the six-year-old PEF's first deal in the billion dollar range, beating four other unidentified shortlisted candidates, including a global strategic buyer, according to investment banking sources on May 11.

Centroid Investment has signed a share purchase agreement with the US-based KPS Capital Partners that is set to pocket more than four times its investment from the exit in four years. It took over TaylorMade from Adidas for $425 million in May 2017.

The acquisition price represents 12 times projected EBITDA of 150 billion won in 2021, compared with last year's 126.5 billion won. The deal is expected to close around July, upon approval by antitrust regulators. 

TaylorMade is the sponsor for many noted PGA Tour players, including Tiger Woods, Dustin Johnson and Rory McIlroy. Centroid Investment plans to boost its market share in Asia, while expanding clothing and other businesses.

Founded in 2015, Centroid Investment is headed by a former Macquarie investment banker Jeong Jinhyeok. It has focused on carve-out deals from large business groups, including fabric maker Kolon Advanced Fiber from textile conglomerate Kolon Group and Woongjin Booxen, a book distributor, from Woongjin Group it took over in 2019 and 2020, respectively.

Last year, the Seoul-based PEF sealed its high-profile acquisition of 18-hole golf course South Springs Country Club from BGF Group, an investment company, for about 172 billion won, or 9.5 billion won per hole, marking one of the priciest golf course sales in Korea.

MINOR PLAYERS' DEBUT

The transaction was the largest takeover of a golf equipment company since Fila Korea Ltd.’s $1.3 billion acquisition in 2011 of Acushnet Holdings Corp., which owned Titleist, the world’s largest manufacturer of golf balls and equipment.

It also became a small Korean brokerage company's debut deal in the global M&A financing market. Shinyoung Securities Co. arranged the acquisition financing worth $900 million for the project "Sunday Red," named after Woods said he wears red on Sundays.

Centroid Investment Partners acquires TaylorMade Golf in its project name \
Centroid Investment Partners acquires TaylorMade Golf in its project name "Sunday Red"

Although Centroid Investment has yet to find a strategic partner to form a consortium for the cross-border deal, it was able to clinch the transaction thanks to financing from Shinyoung. The lead investor in the financing package, MG Korean Federation of Community Credit Cooperatives, is lesser known than other Korean asset owners, as well. 

MG Korean Federation participated as an anchor investor in the equity and mezzanine tranche. Several domestic brokerage firms, including Hana Financial Investment Co., Yuanta Securities Co. and Shinyoung Securities, will provide the remainder in a club deal.

The sources said the Korean PEF will continue to look for a strategic buyer to form a consortium.

Korean PEF clinches />.7 bn TaylorMade Golf acquisition

MIRRORING ACUSHNET DEAL

Industry observers said the financing package is similar to that of Acushnet Holdings' deal.

"After the lucrative Acushnet deal, Shinyoung Securities has chosen the TaylorMade transaction as its landmark deal as it was preparing to enter the investment banking market," an IB source told Market Insight, the capital news arm of The Korea Economic Daily.

Financial investors in Acushnet Holdings, led by the National Pension Service, achieved nearly a 15% internal rate of return after the company went public on the New York Stock Exchange in 2016. For the $1.3 billion transaction in 2011, Fila Korea injected $100 million from its balance sheet and raised $700 million in equity financing and an additional $500 million from bank loans. 

(Note: The dollar conversion value of the transaction was amended to $1.7 billion in the headline and the lead.)

Write to Chae-yeon Kim and Jun-ho Cha at why29@hankyung.com

Yeonhee Kim edited this article.

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