Adidas AG has found a buyer for its TaylorMade, Adams Golf and Ashworth golf brands as the sporting goods firm looks to focus on its core competencies in footwear and apparel and on its two major brands: Adidas and Reebok.
The Herzogenaurach, Germany-based company, which last May announced it was seeking to divest its golf hardware business, on Wednesday revealed it has entered into a definitive agreement to sell the brands to LP, a newly formed affiliate of KPS Capital Partners, for a total of $425 million.
Guggenheim Securities LLC acted as exclusive financial adviser to Adidas AG, and Sheppard, Mullin, Richter & Hampton LLP served as legal counsel for the deal, according to a statement from Adidas AG. Half of the amount will be paid in cash and the remainder in a combination of secured-notes and contingent considerations.
The transaction, which is subject to customary closing conditions, is expected to be completed later this year.
As a result of the transaction, Adidas AG said it will record a non-operational negative profit and loss statement impact in the high-double-digit to low-triple-digit million euro range, which will be reported in discontinued operations as part of the company’s 2017 results.
All Adidas Golf employees will be integrated into the firm’s Adidas Heartbeat Sports business unit, said Kasper Rorsted, chief executive of Adidas AG.
The firm also maintained its full-year guidance with net income from continuing operations expected to reach between 1.22 billion euros and 1.23 billion euros, or $1.33 billion to $1.34 billion at average exchange rates.
The firm also reiterated its 2020 target of between 25 billion euros and 27 billion euros in net sales, or $27.17 billion to $29.34 billion and an implied operating margin of 11 percent.
In addition, the strategic divestiture of the three golf brands has also already been reflected in the company’s updated long-term outlook, Adidas AG said.
The firm’s annual general meeting will be held on Thursday at the Adidas AG headquarters.