Adidas has announced the sale of its TaylorMade golf division, taking a loss of more than US$1 billion.
The German sportswear giant, which is enjoying solid sales growth in its core business, first signalled it would sell its golfing business in May 2016. The sale also includes Ashworth and Adams Golf.
Adidas bought TaylorMade from Salomon in 1997 for $1.4 billion. Ashworth joined the division in 2008 at a price of $72.8 billion and Adams Golf in 2012, for $70 million.
Private equity company KPS Capital Partners will pay Adidas just $425 million for the combined business, half in cash and the balance in secured notes and “contingent considerations”.
Analysts say the low price reflects the “numerous challenges” facing the golfing industry. The ranks of golfers globally are in decline with fewer rounds being played because the sport has failed to attract millennials, and the cost of the sport has reduced the number of rounds being played, especially in the US and Europe.
Adidas’ golfing business achieved sales of $1.2 billion in 2012, but this shrank to just $500 million last year.
Nike exited the golf segment last August.
Adidas CEO Kasper Rorsted said Adidas golf employees would be integrated into the Adidas Heartbeat Sports Business Unit.
“Our focus is clearly on our core competencies in footwear and apparel and on our two major brands, Adidas and Reebok.”
Adidas is now focusing on the sale of its hockey business, CCM, which turns a profit of around $10 million annually.
Purchaser KPS is perhaps best-known in the retail industry for purchasing Waterford Wedgwood in 2009, when it was losing $100 million a year. It centralised manufacturing in Indonesia, cut the company’s workforce and brought it back into the black.