Adidas Group, the parent company of TaylorMade-adidas, announced Monday that it has agreed to purchase Adams Golf brand for the approximate price of $70 million.
TaylorMade will acquire all outstanding shares of Adams for 10.80 per share in cash. The agreement is subject to shareholder and government approval, which TaylorMade CEO Mark King expects to be finalized by midyear.
Adams will remain in its current headquarters in Plano, Texas, a decision King said was made because of his company’s struggles with previous company acquisitions.
“We want Adams to keep its identity,” King said in a Monday conference call. “Treating them as an affiliate helps their growth.”
King said that the purchase of Adams Golf emphasizes his company’s commitment to growth, and strengthens TaylorMade’s ability to market to players seeking game improvement clubs, as well as women and seniors, segments that are very strong in the Adams brand. He also said that for a smaller company, Adams had great ideas around intellectual property, which was a very enticing part of the deal.
“One of the things that having multiple brands helps you do is explore different product strategies,” King said. “We didn’t really take an approach on this around synergy. But if there are those we can take naturally, we’ll do it. But we’re not going to put Adams and Yes! products in the TaylorMade tour van … I don’t see the products streamlining.”
King said that TaylorMade’s voice is directed at players with handicaps between 0-4, such as serious amateurs, college players and professionals. There had been conversation at TaylorMade about releasing a senior line, but King said his company made the decision to keep marketing aimed at “the top of the pyramid.”
“We made a foray into women’s club,” King said, “but when you don’t market it heavily and you don’t have your heart in it, that’s what you get. [Adams] is in the sweets spot of the group we don’t market to today.”
One of the first orders of business for TaylorMade will be locating a leader for the Adams brand. Former CEO Chip Brewer left Adams Golf for Callaway Golf on Feb. 28, leaving Adams Golf founder Barney Adams as the interim CEO. King said TaylorMade is looking for a candidate this is willing to live in Plano and can emotionally connect with the brand. His company is searching inside its brand, as well as doing an executive search.
King said that TaylorMade can help Adams in several areas, such as the international community. According to King, company sales for Adams are only 10 percent overseas, while TaylorMade sells about 60 percent of its products internationally.
“The [international] network already exists,” King said. “They would be funneling product into existing channels.”
According to King, this will most likely be done through a small Adams team working with TaylorMade’s infrastructure outside the U.S., and possibly creating specific product lines for countries such as Asia, which is common for large OEMs such as TaylorMade.
Adams also lacks a golf ball and accessory lines, which King said TaylorMade could bolster for Adams.
Click here for the press release and discussion.
Click here for more discussion on TaylorMade CEO Mark King’s conference call.
This story was first leaked by GolfWRX on March 8.
Click here to see the original leak — a thread in Tour/Pre-Release Equipment.