South Korean apparel company F&F Co announced on Monday that it had engaged Goldman Sachs as its advisor on the prospective purchase of TaylorMade. The company also stated that it would pursue legal action if the current owner of TaylorMade proceeds with an independent sale process.
Earlier this year, Centroid Investment Partners, a private equity firm headquartered in Seoul, initiated a sales process for TaylorMade, which it had acquired in 2021. The company, based in Carlsbad, California, could potentially be sold for as much as $3.5 billion, according to those familiar with the transaction.
F&F Co was a pivotal player in the 2021 acquisition of TaylorMade, participating as a strategic investor. As the most significant investor, F&F secured written Consent Rights over major business decisions, which included borrowing, key management decisions, and sales of equity. However, F&F has not approved Centroid’s current attempt to sell TaylorMade, and it views this action as a considerable violation of its contractual consent rights.
Despite the potential acquisition, F&F stated that it is fully prepared to use all available legal and contractual measures to hold Centroid accountable for any violations. The company is carefully preparing to exercise its Right of First Refusal (ROFR) if necessary, to ensure alignment with its original investment thesis.
F&F’s investment in the acquisition of TaylorMade by Centroid was substantial, contributing 358 billion won ($258 million) of a total subordinated equity investment of 619.2 billion won. This made F&F the primary equity investor as a limited partner (LP).
Additionally, F&F contributed 195.7 billion won to a mezzanine investment of 471.5 billion won. The fashion company had already expressed its intent to acquire TaylorMade last month, explaining that its significant investment in TaylorMade in 2021 was made with the ultimate aim of acquiring the company.
According to insiders, Centroid’s advisors have sent confidential memoranda and process letters concerning the sale of TaylorMade to potential buyers. However, no official process has been initiated yet. Responding to a request for comment, Centroid confirmed it was in the process of selling TaylorMade to maximize its LPs’ return on investment.
In the private equity sector, a GP, or General Partner, refers to the manager of a fund who is responsible for making investment and operational decisions. In contrast, LPs, or Limited Partners, are investors in the fund who usually have a passive role in individual deals. F&F is an LP investor in a fund managed by Centroid as the GP.
Centroid confirmed that F&F holds the right of first refusal, which it guarantees. However, it pointed out that this right does not preclude a sale process from occurring.
Established in 1979, TaylorMade produces golf clubs, balls, and other golf-related accessories. The company has offices in Canada, China, Japan, South Korea, and Australia, in addition to its U.S. base.
What is F&F Co’s role in TaylorMade’s acquisition?
F&F Co participated as a strategic investor in the 2021 acquisition of TaylorMade and is the largest equity investor as a limited partner (LP).
What are the potential legal actions that F&F Co might take?
F&F Co stated that it is fully prepared to use all available legal and contractual measures to hold Centroid accountable for any violations of its contractual consent rights.
What is the right of first refusal that F&F Co holds?
The right of first refusal allows F&F Co to decide whether or not to match the terms of a sale determined through the auction process.
