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The Loop

Q&A with Titleist chief Wally Uihlein on sale to Fila, Mirae

When Fortune Brands announced Dec. 8 that it would seek to sell or spin off the Acushnet Company (comprised of Titleist, FootJoy and Pinnacle) it set off a stream of speculation ranging from existing golf companies purchasing the brands to them being sold off in parts to even micro brands such as the Scotty Cameron putter line or Vokey wedge business being parceled off. Other guesses included Acushnet chairman and CEO Wally Uihlein partnering with a private-equity firm to buy the company.  Today the conjecture, rumors and gossip were put to rest with the announcement Fortune Brands had sold Acushnet (which had $1.2 billion in sales in 2010) to Fila Korea Ltd. and Mirae Asset Private Equity, the largest private equity firm in Korea. The sale remains subject to closing conditions, including the usual regulatory approvals, and is expected to close this summer. The price, according to a source with knowledge of the situation, is $1.225 billion. After the acquisition, Acushnet will remain as a standalone company with its worldwide headquarters remaining in Fairhaven, Mass. The current management team, including Uihlein, will remain in place. Uihlein joined Acushnet in 1976 as a regional sales representative for Titleist and climbed the company ranks to where he was named chairman and CEO in 2000. Uihlein also received the PGA of America's Distinguished Service Award in 2005.  E. Michael Johnson, Golf World's senior editor, equipment, spoke with Uihlein this morning about the transaction.

GW: It's been an interesting six months, hasn't it? WU: Yes, there is nothing like conclusion. We've been using the metaphor it is like Magellan's voyage of 1519--you can't provide safe harbor until you provide safe passage. We are very excited about it, particularly the principles involved in it and the centric nature of where the equity is coming from. There is no better-structured golf market than Korea. It's a vibrant market and it has the four necessary conditions that the golf industry requires: a middle class, teaching infrastructures, places to practice, and the professional game. It also is going to help us in that part of the world, while at the same time the acquiring entity is such that it will remain business as usual here.  GW: With 3 million golfers already in Korea as well as 400 golf courses, there's definitely room for growth. WU: Yes, the metrics are compelling not just there, but in that part of the world. Korea represents a model for other countries to follow, particularly in China and Southeast Asia. Even from where we sit it just underscores what we know and what we have articulated all along which is the fact there is a global industry. We have been a global player, but what this does is put an exclamation point on the globalization of the industry, the globalization of the players and the globalization of those who are invested in the industry. This group was one of the preferred outcome players right from the get go. GW: Can you say how many bids were received? WU: Other than it was, as Bruce Carbonari [chairman and CEO of Fortune Brands] said in his press conferences, an active process. It is rare that the industry leader comes available. So let's just say it was an intense and active process. GW: What will you need to teach the Fila people in Korea as far as what the Acushnet Co. is all about? And what, besides money, does this deal bring to Acushnet? WU: I don't think we will need to teach them anything. We were handicapping the bidders not just from a fit point of view, but also from what we called an understanding of the essence of the company and understanding the industry. It is not just about the money, because the money, while we are respecting the process and that includes the Fortune Brand shareholders, our interest is in the strategic and cultural fit the day after. We were handicapping all of the bidders and at the same time maximizing the value of the transaction. Gene Yoon [chairman and CEO of Fila Korea Ltd.] is a very avid golfer. They are in the recreational footwear and apparel business. We've had a number of meetings with the principles, so we are comfortable that the learning curve will be short and of a low slope.  GW: What are your thoughts on Korea as a market and the growth potential there? WU: Korea, as I said, is the most organized golf country in the world. We talked about the four things. The diagnostics we use to assess a country's opportunity has those four things. How big is the middle class? Does it have an educational infrastructure? What do the driving range/golf course access components look like? What is the status of its professional game? What is the pyramid of influence opportunity because that variable makes the game in any country exciting to watch and inviting to play? Korea has those four variables in spades. The middle class is one of the fastest growing in the world. To wit, they already have 3 million golfers, we think it will get to 5 million, which is very close to the U.S.'s 10 percent of population participation number, which is the highest in the world. It has 400 and that will probably tap out at 550 simply due to the land-locked nature and the geography of the country. It has 1,200 outdoor standalone driving ranges and 9,000 certified instructors. If you walk into a driving range there, you walk in and on the wall are photos of 15 instructors and they have three trainers. It is the most organized golf country in the world as far as understanding the game of golf is not easy. In understanding that golf needs to facilitate the transfer of best practice. Korea is doing all of that. There isn't another country that has two TV channels of golf content. The upside is undefined and open-ended.  GW: Acushnet is not just a golf company by business, but the game is in your company's soul. How much does the fact Mr. Yoon is an avid golfer help with this deal going forward? WU: It's not just that Mr. Yoon is a golfer that relegated Fila and Mirae to preferred outcome status early on. It was that this guy is a successful businessman, who was, for the most part, responsible for the growth and the resuscitation of the Fila brand on a global basis. The Fila brand has almost a Burberry status in Asia Pacific.  It is seen as premium status, premium design, distributed in premium channels of distribution. Having someone who represents the equity side of the equation who gets it and really understands and has an appreciation for the culture of a business enterprise, not just its numbers, is a big plus.  GW: Do you see any potential roadblocks along the way to closing? WU: No, we don't. Because again, we just don't think there are any potential issues outstanding. You never say never, but we just don't think in this case that we see any. We are expecting an expeditious close.  GW: Do you think Acushnet is now on the verge of something even much larger than it has ever had before? WU: We are excited because we think it is an exclamation point on the company's requirement to be seen as a global player. We were centric in the U.S. We grew in size as the game grew on the back and the shoulders of the growth of the U.S. market from 1960-1980. But the fact is today, it is a global game. We cross all borders and all we see is this is an affirmation and a formalization that the Acushnet company is a global golf company and now is better positioned than we were to compete in the global environment against competitors who are similarly in a global position. Certainly in my lifetime, if I could have achieved anything when I started here umpteen years ago, it would be to get the company in a position where it can sustain the brands, and today that is dictated by the globalization of golf. Companies that are going to be U.S. centric, they will be roadkill on tomorrow's scorecard.