F&F may pay $350 mn for TaylorMade without Korean sales license

South Korean outdoor clothing retailer F&F Co. may not be able to sell apparel of TaylorMade Golf Co. in the country even after a $350 million takeover deal as another local company secured a 10-year right to sell outfits of the global golf equipment maker.

F&F, a distributor of the Discovery Expedition and MLB outfits, was selected as the strategic buyer of TaylorMade, which Seoul-based private equity firm Centroid Investment Partners agreed to buy for $1.7 billion. F&F agreed to stump up 400 billion won ($349.8 million) in a bid to expand its presence in the fast-growing domestic golf wear markets.

But another local apparel retailer, Hansung F.I announced on Aug. 4 that it has signed a 10-year license deal with TaylorMade Global on golf wear business in South Korea. The company specialized in sportswear had such a license to sell Callaway apparel for eight years.

Hansung was known to have tried to contact TaylorMade since last year when the Callaway license was expired, betting growth potential in the local golf wear markets.

LICENSE DEAL BEFORE M&A

“Hansung F.I obtained the apparel license before TaylorMade Global put its management right on sale, as far as I know,” said an investment banking industry source.

South Korea’s golf wear markets are growing fast as more golfers played in the field amid booming outdoor activities due to the COVID-19. Golf wear sales at 22 department stores in Seoul and the surrounding areas rose 15% last year. Parsons Xtreme Golf (PXG) and Titleist, brands derived from equipment makers, were more popular.

Hansung F.I already started marketing campaign to promote TaylorMade golf wear. It signed a sponsorship contract with a South Korean professional golfer Yoo Hyun-ju and unveiled various products.

The 10-year deal is expected to jeopardize F&F’s attempt to obtain its own brand through the acquisition of TaylorMade. F&F made a huge success at home and abroad thanks to licenses with global fashion brands, but it wants its own now.

“We will sell apparel in overseas markets such as the United States although we don’t have the local license. I also understand that there is room for negotiations on the domestic license,” said a F&F source.

Some in the local M&A industry speculated F&F’s acquisition could be at risk of collapse as the company may pull out of the deal as it could not secure the license.

Write to Jeong-Cheol Bae and Dong-Hui Park at bjc@hankyung.com
Jongwoo Cheon edited this article.