Golf EquipmentMay 4, 2016

Adidas decides to sell parts of golf division, including TaylorMade

In announcing its otherwise positive first quarter earnings on Wednesday, Adidas revealed that it had decided "to enter into concrete negotiations with interested parties" toward a sale of parts of the company’s golf division.

Sale talks of Adidas golf brands were formally announced in August, but TaylorMade adidas Golf CEO David Abeles explained that TaylorMade had not been sold in an internal company email in January, according to Internet reports. In April, he also maintained that TaylorMade had the unconditional support of Adidas. But in a change from previous statements, Adidas' potential sale now definitely will include TaylorMade, the perennial industry leader in metalwood sales.

“TaylorMade is a very viable business. However, we decided that now is the time to focus even more on our core strength in the athletic footwear and apparel market,” said Herbert Hainer, CEO of the Adidas Group. “With its leadership position in the industry and the turnaround plan gaining traction, which is clearly reflected in the top- and bottom-line improvements recorded in Q1 as well as recent market share gains, I am convinced that TaylorMade offers attractive growth opportunities in the future. At the same time, the planned divestiture will allow us to reduce complexity and focus our efforts on those areas of our business that offer the highest return and where we can have the biggest impact in reaching our consumers and winning their loyalty for the Adidas and Reebok brands.”

Adidas currently owns the TaylorMade, Adams, Ashworth and Adidas golf brands. In the announcement, the company said it would retain the Adidas Golf brand, which deals primarily in shoes and apparel. Hainer said the move was part of a shift in focus for Adidas. "The planned divestiture will allow us to reduce complexity and focus our efforts on those areas of our business that offer the highest return," he said.

Abeles told Fortune.com last month, "In my 12 months back, 14 years all in [at TaylorMade], I’ve never felt as much support from our parent company as I do right now. The executive team and Mr. Hainer have been unconditionally committed to get TaylorMade and Adidas Golf to grow and we’ve got leadership in big categories in golf. We are building a sustainable growth model."

During Wednesday's earnings call, Adidas chief financial officer Robin Stalker addressed the prospects for the sale of the golf brands this way: "What we want for it is the best price we can get for it. We've just taken this strategic decision so I can't give you any other comments on what the price is at this stage. We'll enter into negotiations and we'll keep you informed. We have the goal to continue to invest in our business so the proceeds of the sale in the first instance will be used to continue to invest in our business. We have a good shareholder return program ongoing, but we don't have any acquisitions planned or anything like that planned at this stage."

TaylorMade was part of the French ski and boot manufacturer Salomon when Adidas acquired Salomon for an estimated $1.4 billion in 1997. Since then, Adidas has acquired Reebok (an estimated $3.8 billion deal in 2005), and TaylorMade has acquired the Ashworth and Adams brands, for approximately $73 million (in 2008) and $70 million (in 2012) , respectively.

Wednesday's announcement came at the end of the company's first-quarter sales report, which showed Adidas' overall net sales up 22 percent compared to last year. On a currency neutral basis, Adidas reported that TaylorMade's golf business was up 6 percent vs. last year, but the overall golf brand including Adams and Ashworth was down 1 percent.

One leading U.S. retailer was bullish on the TaylorMade brand. Dick Sullivan, CEO of PGA Tour Superstore cited TaylorMade's "strong growth" across his national chain of megastores across 13 states. “Their products are really resonating with consumers," Sullivan said. "These brands have rebounded nicely from some declines in recent years and the leadership team at TaylorMade-adidas is strong and they have a great vision for continuing to improve their business both this year and in the future.”

Here's a link to the full press release.

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