F&F’s bid for TaylorMade complicates Centroid's exit

South Korean fashion retailer F&F Co., the largest strategic investor in TaylorMade Golf Co., has announced a bid for the golf equipment and apparel brand, triggering a major headache for the latter’s top shareholder Centroid Investment Partners.

F&F, known for transforming brands of a US documentary channel and sports league into successful clothing labels, has also threatened every possible legal action over Seoul-based Centroid’s move to proceed with the sale -- estimated at 5 trillion won ($3.7 billion) -- without its consent.

“We, the largest investor in TaylorMade, made the strategic investment with the intention of acquiring the company from the beginning,” F&F said in a statement on Tuesday. “There has been no change in that intention.”

In 2021, F&F backed Centroid’s $1.7 billion acquisition of 100% of TaylorMade by contributing 550 billion won. Its investment consisted of 200 billion won in mezzanine financing and 350 billion won in subordinated equity.

F&F argued that the terms of the investment require Centroid to obtain prior consent before putting TaylorMade on the market and to grant F&F preferential rights over other bidders to acquire the company.

“We will mobilize every possible legal action to hold Centroid responsible for moving forward with the sale without F&F’s prior consent,” F&F said.

Centroid initially aimed to list TaylorMade on New York Stock Exchange, where the two other largest golf equipment makers – Acushnet and Callaway – are traded.

However, it chose instead to put the company on the market. In March, it appointed JPMorgan and Jefferies as lead managers to handle the sale.

The South Korean private equity firm has sent teaser letters to potential buyers of one of the world’s top three golf clothing and equipment brands at home and abroad.

TaylorMade is a key asset F&F is reluctant to give up as it sees the brand as a springboard for its ambition to become a global fashion brand.

F&F has transformed Discovery Expedition, a US documentary channel, and MLP, the US professional baseball league, into apparel labeks in licensing agreements. Those brands have reported strong performance in China.

“We will deploy all available resources to secure control of TaylorMade in line with our original investment objective,” F&F said.

The private equity house is asking for 5 trillion won, or 2.5 times the acquisition price, citing the company’s rapid sales growth since its acquisition.

In 2024, TaylorMade’s revenue in South Korea rose 3.3% to 164.1 billion won, defying a broad slump in the domestic golf market.

Write to Sun A Lee at suna@hankyung.com
 

Yeonhee Kim edited this article.