As the sale of TaylorMade, one of the world's three major golf equipment brands, enters the final stage, attention is focusing on F&F's choice. In the securities market, F&F's acquisition of TaylorMade is seen as only a matter of time, and if it can buy it at a reasonable price, it is expected to serve as an important driver for F&F's share price.
There was criticism that F&F's exercise of its right of first refusal for TaylorMade last year could constitute a violation of the Financial Investment Services and Capital Markets Act, but the consensus now is that Chairman Kim Chang-su of F&F showed sound judgment.
According to the retail industry on the 15th, there is an outlook that the process to acquire TaylorMade will be completed by March. Centroid PE (hereinafter Centroid PE), the private equity fund leading the sale of TaylorMade, has recently been in talks for a main bid contract with Old Tom Capital, a U.S. golf-focused private equity fund. The sale price is expected to be around $3 billion (about 4.4226 trillion won) as proposed by Old Tom Capital.
At this time, F&F has a right of first refusal to buy TaylorMade under the same terms. This condition came when F&F contributed about 600 billion won as Centroid PE acquired TaylorMade in 2021.
In the securities market, F&F's investment in TaylorMade is viewed as a managerially sound decision from two standpoints. First, it is an environment where overpaying is less likely. In mergers and acquisitions, the greatest risk is buying at a price above the actual corporate value. But Chairman Kim Chang-su and his son, Executive Director Kim Seung-beom, have served on the TaylorMade Holdings board, gaining a detailed grasp of the business. An investment industry source said, "When doing M&A, hidden liabilities can surface unexpectedly, and situations can arise that make it hard to run the business as planned, but F&F does not face such risks."
Second, it makes sense in terms of efficiently allocating the investment proceeds that would be in hand after selling TaylorMade. If TaylorMade is sold to Old Tom Capital, F&F would pocket about 1.6 trillion won in revenue. It is a moment that requires a management decision on where to allocate the 1.6 trillion won.
In the capital market, given the scale of 1.6 trillion won, it is seen as inevitable to pursue mergers and acquisitions rather than internal investments. If it is going to pursue M&A anyway, the reasoning goes, it is better to buy TaylorMade, a corporation it knows well. A capital market industry source said, "There is currently no M&A target in the market that can surpass TaylorMade."
Reports along these lines are also emerging in the securities market. NH Investment & Securities, in a stock report on F&F on the 7th, projected that "the acquisition of TaylorMade is only a matter of time and will act as a driver for a share price rise." It gave a "buy" rating and set a target price of 100,000 won. F&F's closing price on the 13th was 63,000 won.
In fact, the past year was quite noisy over F&F's attempt to acquire TaylorMade. That was because there were interpretations that F&F's right of first refusal and prior consent right over the sale itself could run afoul of the Financial Investment Services and Capital Markets Act. There was also criticism that Chairman Kim Chang-su misjudged by pursuing an investment likely to be mired in controversy. When the TaylorMade investment was being considered, most of the internal management's opinion was "opposed."
A person familiar with F&F's situation said, "Attorney Park Jae-hyun of law firm YulChon advised in strong terms that there were no major legal issues, and that led to F&F's investment in TaylorMade," adding, "The investment was decided with legal advice layered onto Chairman Kim Chang-su's intent, but internally there were many opinions against taking on a risky investment."
A fashion industry source said, "In the end, there is talk that Chairman Kim Chang-su's judgment was right," adding, "If the Chinese government lifts the 'ban on the Korean wave,' F&F's local business is expected to breathe easier, and once it adds a new growth engine in TaylorMade, there are expectations for F&F's next steps."
Kim is known for rejecting the fashion industry's traditional practice of indiscriminately importing popular overseas fashion brands and instead growing the company by bringing in brands unrelated to fashion and recreating them with F&F's own concept. A prime example is MLB. Kim succeeded by applying the MLB brand, which in the United States had largely been limited to baseball caps and gear, to a variety of fashion items.