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Adidas Announces Intent To Acquire Ashworth
From Marketwise
December 2008

In a move that will merge a global sporting goods giant and a major player in corporate apparel, Adidas has reached a definitive agreement to buy Ashworth Golf Co. (asi/37128), based in Carlsbad, CA, the two public companies reported in October. Adidas will pay $1.90 per share for Ashworth stock. The deal is worth $26.5 million and includes Adidas assuming $46.3 million of Ashworth debt. "It provides us an opportunity for growth and gives us a partner that has deeper pockets than a smaller company like us," says Tim Cronin, vice president of Ashworth’s corporate division. "I only see positives from the deal."

Cronin says the Ashworth label will remain separate from Adidas. He would not speculate on how much Ashworth’s corporate division would be affected by the pending acquisition. It is also unclear if Adidas will take an increased role in the corporate apparel business. An Adidas spokesman said it is premature to discuss the issue, but stressed the significance of the deal. "Ashworth is an authentic golf brand that will complement our signature fabrics and complete our clothing portfolio," says Adidas’ Scott Leightman.

The deal is expected to be finalized before the end of this year, but could still face opposition from shareholders. At the beginning of October, Ashworth stock traded at $3.75 a share. The stock price has dipped significantly since, falling below two dollars a share. Ashworth’s financial struggles have burgeoned this year, with the company already realizing a loss of $16 million, amid a slowing sales pace.

Adidas is the second-largest sporting goods producer in the world, trailing only Nike. If Ashworth shareholders approve the proposal, Leightman says Adidas will complete the sale with cash.

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