Adidas Group announced Wednesday morning it intends to sell TaylorMade Golf, Adams Golf and the clothing brand Ashworth.
The decision came as a result of a nine-month strategic review, coming to the conclusion that, despite an uptick in Q1 2016 sales, the company should focus on its apparel lines.
“As a result of this strategic review, the Executive Board decided to enter into concrete negotiations with interested parties aimed at a divestiture of parts of the company’s golf division,” said the company in a released statement.
Adidas acquired TaylorMade, which was founded by Gary Adams in 1979, in 1997 as part of a $1.4 billion acquisition of French skiing label Salomon. The company added the Ashworth brand in 2008 for $72.8 million, including debt, and Adams Golf in a 2012 purchase for $70 million.
Adidas does not intend to exit the golf market completely. Rather, the company will focus on golf footwear and apparel through its adidas Golf brand.
Rumors had been swirling for months about a potential sale since August 2015, when outgoing adidas Group CEO Herbert Hainer announced the company would begin exploring a sale of any or all of its three non-namesake golf brands.
In January, a social media posting from golf equipment site MyGolfSpy suggested a sale may be imminent. TaylorMade Golf CEO David Abeles adamantly denied the rumors in an internal email, saying in part, “feel free to insure those who inquire that TaylorMade has NOT been sold.”
Abeles added, “In fact, the adidas Group has never been more supportive of our business (including all of the momentum that has been created by our teams) and shares the same optimism that we all do relative to our TMaG business in 2016 and beyond.”
The Q1 2016 returns suggest TaylorMade-adidas Golf’s primary golf brands have been improving, including a 6.2 percent increase in sales at TaylorMade and a 3 percent increase in adidas Golf. However, golf unit sales declined overall by 1 percent, with growth offset by losses from Ashworth and the nearly dormant Adams unit.
Hainer emphasized the sales uptick in the company’s earnings call, underscoring the value of the TaylorMade business to a potential buyer.
“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 Hainer. “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.”
As for a potential buyer, several Asia-based firms and private equity groups have been interested in this trio of brands.