Decision Time Nears for F&F as Multiple Bidders Join TaylorMade Acquisition

The main bidding process for the sale of TaylorMade, one of the world’s top three golf brands, has begun. With multiple bidders participating, the clock is ticking for F&F, which holds the right of first refusal.

According to the investment banking industry on November 13, several global private equity firms, including a US-based multi-family office (which manages the assets of multiple ultra-high-net-worth individuals), have reportedly joined the main bidding for TaylorMade. The sale involves 100% of TaylorMade’s shares, with JP Morgan and Jefferies acting as lead managers.

TaylorMade image. TaylorMade

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Centroid Investment, which owns 100% of TaylorMade’s shares, is seeking to sell its management rights with a target enterprise value of over 4 trillion won. Some of the bidders in the main bidding have shown strong interest in acquiring the company, raising the likelihood that the deal could close at a price in the mid-4 trillion won range.

LIV Golf Investments, which had previously been shortlisted as a qualified bidder, is said not to have participated in the main bidding. Backed by Middle Eastern oil money and sponsored by Saudi Arabia’s Public Investment Fund (PIF), LIV Golf Investments was considered a strong potential buyer.

With the main bidding for TaylorMade underway, attention is focused on F&F, which holds the right of first refusal. Centroid plans to finalize the main bid deadline soon, depending on the moves of the acquisition candidates. Once Centroid selects a preferred negotiating party after the main bidding and notifies F&F, F&F must decide within 14 days whether to acquire the company under the same terms.

According to industry sources, F&F has set 4 trillion won as its appropriate acquisition price. To this end, it has reportedly teamed up with Mirae Asset Securities, Korea Investment & Securities, and Samsung Securities to arrange a financing structure of about 4 trillion won. The plan is to raise funds through price return swaps (PRS) and acquisition financing, while F&F will contribute equity using its own cash reserves. There is also speculation that domestic private equity firms specializing in credit investment strategies may participate.

The key issue is the price. If the sale price significantly exceeds 4 trillion won, the practical benefits for F&F after the acquisition may diminish. F&F has expressed its intention to exercise its right of first refusal and has appointed Goldman Sachs as its lead manager.

A PRS is a contract in which a conglomerate transfers ownership of its own or subsidiary shares to a financial institution such as a securities firm, but gains or losses from changes in share value are attributed to the company. Most PRS contracts include a condition that the company repurchases the shares after a certain period, and during this period, the financial institution holding the shares receives interest at a rate higher than that of corporate bonds. Therefore, if F&F acquires TaylorMade at a high price, its financial soundness could deteriorate.

F&F participated as a strategic investor when Centroid acquired TaylorMade for about 2.1 trillion won in 2021. It invested 553.7 billion won under the condition of obtaining the right of first refusal. Subsequently, by acquiring additional fund shares, F&F invested about 600 billion won in total, and if the sale closes in the mid-4 trillion won range, it could realize a profit of over 1 trillion won.

An industry insider said, "The outline of TaylorMade’s new owner could emerge as early as within this year," adding, "While the likelihood of F&F exercising its right of first refusal appears high, if the sale price far exceeds 4 trillion won, F&F may also consider selling its stake, just as Centroid is doing."

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