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Apparel retailer F&F joins in $1.7 bn TaylorMade deal

The Korean retailer of the Discovery and MLB apparels will invest 400 mn won in TaylorMade

By Jul 20, 2021 (Gmt+09:00)

Apparel retailer F&F joins in />.7 bn TaylorMade deal

F&F Co., the South Korean retailer of the outdoor clothing brands Discovery Expedition and MLB, has been selected as the strategic buyer of TaylorMade Golf Co., which Seoul-based private equity firm Centroid Investment Partners agreed to buy for $1.7billion.

F&F is replacing its local rival The Nature Holdings, previously picked as a strategic investor in the cross-border deal over F&F and major Korean retail groups Shinsegae and CJ, according to investment banking sources on Monday.

As some institutional investors withdrew from the acquisition deal, the distributor of the Discovery Expedition and MLB outfits expressed its strong intention to fill the void.

F&F agreed to stump up 400 billion won ($350 million) in cash, four times more than the Nature Holdings' commitment. The Nature Holdings has the license to sell the apparel brands of National Geographic, Jeep, NFL and Vera Wang in South Korea.

Last month, Centroid signed a definitive agreement to buy 100% of TaylorMade, one of the world's top three golf equipment makers, from New York-based KPS Capital Partners. 

To finance the largest-ever acquisition in the golf goods industry, the Korean PEF had looked for a strategic partner with an aim to expand the US sports brand's fashion business.

Along with F&F, the 74th largest stock on the Korea Exchange, MG Korean Federation of Community Credit Cooperatives participated as an equity investor for an unspecified amount. 

FINANCING DETAILS

For the TaylorMade purchase, Centroid is raising a total of 2.07 trillion won ($1.8 billion), based on the dollar/won conversion rate of 1,141.1 as of July 19, F&F said in a regulatory filing on Tuesday.

The fundraising breaks down into 1 trillion won in acquisition financing; 463.3 billion won in mezzanine financing; and 605.9 billion won in equity investments.  

F&F will divide its investment into 100 billion won in the mezzanine tranche and 300 billion won in an equity stake. To complete the payment by early next month, it is borrowing 300 billion won in a bridge loan from a brokerage company.

After the deal closes early next month, F&F will end up with a 49.51 stake in a special purpose company established for the acquisition, F&F added.

Down the road, Centroid Investment plans to list TaylorMade in New York Stock Exchange where the two other largest golf equipment makers -- Acushnet and Callaway -- are traded.

Apparel retailer F&F joins in />.7 bn TaylorMade deal

Launched in 1992, F&F has rapidly grown its business with the domestic launch of the Discovery Expedition and MLB apparels in licensing agreements. It had also introduced the Italian clothing brand Benetton and the French apparel Renoma to South Korea in licensing contracts. 

Now the Korean company is setting its sights on China. Last month, it opened an MLB Kids outlet in the Global Harbor Shopping Mall, Shanghai’s largest retail shop. F&F plans to increase its MLB and MLB Kids outlets in China to 270 and 40, respectively, by the end of this year. 

Shares in F&F, with a market capitalization of 4.4 trillion won, spiked 6.5% to 574,000 won around midday following the public disclosure. In morning trade, the stock leapt to as high as 581,000 won, its highest intraday level since it was spun off from F&F Holdings Co. and relisted in late May. 

Write to Ji-hye Min, Chae-yeon Kim and Jun-ho Cha at spop@hankyung.com

Yeonhee Kim edited this article.

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