Europe-based Adidas AG, whose products are sold by various promo product suppliers, has announced the sale of its golf equipment business to a newly formed affiliate of private-equity firm KPS Capital Partners. The $425 million deal includes brands TaylorMade, Adams Golf and Ashworth. Going forward, Adidas said it will focus on producing golf clothing.
“We welcome all Adidas Golf employees who will be integrated into our Adidas Heartbeat Sports Business Unit,” Adidas CEO Kasper Rorsted said in a statement. “Our focus is clearly on our core competencies in footwear and apparel and on our two major brands, Adidas and Reebok.”
According to the New York Post, Adidas’ golf division has been losing between $75 million and $100 million a year. As recently as 2013, TaylorMade was generating $1.7 billion in annual sales, along with strong profits, the Post reported. In 2016, Adidas’ entire golf unit produced net sales of $892 million.
As the golf equipment market cratered, the struggles at Adidas Golf were similar to what other companies – including Nike – faced of late. Nike announced last year that it would also focus on golf clothing and stop selling golf gear, like clubs. In the fallout of Nike’s announcement, Adidas signed Tiger Woods to an endorsement deal earlier this year, hoping to energize the TaylorMade brand, but Woods’ extended absence from golf because of injuries extinguished any serious comeback efforts for the label, at least in the short-term.
Parties involved say about half of the $425 million exchanged in the deal will be paid in cash, while the remaining portion will be paid in the form of a secured note and contingent considerations. The final sale is likely to be completed in late 2017.