'TaylorMade, the 5 Trillion Won Giant: F&F's Complex Calculations as Both Investor and Bidder'

The sale of the global golf brand TaylorMade has entered full swing. As the preliminary bidding process is underway, attention is focused on how F&F will secure acquisition funds if it is selected as the preferred bidder in the main bidding round.

According to the investment banking (IB) industry on August 28, multiple investment firms participated in the preliminary bidding organized by TaylorMade’s largest shareholder, Centroid Investment (hereinafter referred to as Centroid). Given that TaylorMade is a global brand and the seller’s desired price is close to 5 trillion won, this large-scale deal has attracted the interest of major global investment firms.

TaylorMade

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With the sale procedures for TaylorMade now in full swing, attention is turning to F&F, which holds the right of first refusal. This right allows F&F to acquire management control under the same conditions as a third-party bidder, provided it matches the offer within a specified period if another party expresses interest in acquiring TaylorMade.

After the preliminary bidding, due diligence and the main bidding process will follow. Once the seller selects a preferred negotiating party, F&F must decide within two weeks whether to exercise its right of first refusal. Last month, F&F appointed Goldman Sachs as its advisor for the acquisition and is preparing its acquisition strategy.

The key issue is the price. If a bidder offers the 5 trillion won that Centroid is seeking, F&F will need to raise funds in the trillion-won range from external sources. When Centroid acquired TaylorMade for approximately 2.1 trillion won in 2021, F&F participated as a strategic investor, contributing 553.7 billion won in exchange for obtaining the right of first refusal. F&F later invested an additional 600 billion won by acquiring more stakes from other fund investors.

If the sale price is set at 5 trillion won, F&F is estimated to receive around 1.5 trillion won in profits. As of the first half of the year, F&F and F&F Holdings hold 311.4 billion won in cash and cash equivalents on a consolidated basis. Even after adding the principal and profits, their total funds would amount to about 2.4 trillion won, meaning they would still need to secure an additional 2.6 trillion won to acquire TaylorMade.

Even if F&F secures acquisition financing, raising the necessary funds will not be easy. With a debt ratio of 30.52% in the first half of the year, F&F’s financial capacity is sufficient to obtain acquisition financing. However, industry insiders believe that it would be feasible to raise around 2 trillion won-equivalent to six to seven times TaylorMade’s EBITDA of approximately 310 billion won. Considering taxes and operating expenses, F&F would still need to raise additional funds in the trillion-won range.

It is highly likely that F&F will seek a white knight to jointly acquire TaylorMade. Goldman Sachs, F&F’s advisor, has reportedly proposed to several potential bidders the idea of forming a consortium with F&F. However, the fact that F&F is both a major investor and a bidder poses a challenge. If F&F forms a consortium with a potential bidder, it could spark controversy over “bid interference.”

Centroid has criticized F&F, arguing that forming a consortium instead of acquiring TaylorMade independently constitutes an act of obstructing the sale. An investor (LP) who participated in the fund at the time of TaylorMade’s acquisition stated, “There are some concerns, but only the GP, Centroid, has the authority to raise such issues.” If Centroid raises objections in the future, legal disputes are expected.

After the acquisition, F&F plans to focus not only on TaylorMade’s core golf equipment business but also to expand into apparel and golf ball businesses. The company is showing strong determination to acquire TaylorMade, devising specific strategies such as launching premium lines in collaboration with global brands.

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