Callaway Golf Confirms It's Weighing Bids
Thursday June 23, 7:57 pm ET
By Elliot Spagat, AP Business Writer
Callaway Golf Confirms It's Weighing Takeover Bids; Thomas H. Lee Reportedly Offers $1.2B
SAN DIEGO (AP) -- Callaway Golf Co., the nation's largest manufacturer of golf clubs, said Thursday that it has received unsolicited takeover bids.
The announcement followed a report in the Los Angeles Times that Callaway was weighing an all-cash, $1.2 billion offer from Thomas H. Lee Partners and insurance mogul William Foley II that would take the company private. The newspaper, citing unidentified sources close to the situation, said the offer was submitted to Callaway's board May 20.
"We feel that this is an opportune time to explore a full range of strategic alternatives that could enhance shareholder value," said Ronald S. Beard, lead independent director.
Callaway, which is based in Carlsbad, did not name potential suitors in a brief statement. A representative of Thomas H. Lee Partners declined to comment Thursday. The Boston-based private equity firm has $14 billion of committed capital.
The maker of Big Bertha drivers said it "has received unsolicited indications of interest from various parties from time to time."
It added that "no firm offers have been made, no substantive discussions are currently under way, and neither the board nor the senior management team has reached any decisions regarding the preferred strategic direction for the company."
Shares of Callaway surged 14.5 percent Thursday, closing at $15.55, up $1.97, on the New York Stock Exchange.
The company said it has hired New York investment bank Lazard Ltd. as an adviser.
The news didn't surprise analysts who have watched Callaway shares climb steadily since April without any signs that the company was turning itself around.
Callaway flooded retailers early last year with new clubs and balls that were largely unsuccessful, leaving stores with big inventories that forced the company to slash prices. In August, it installed its chairman and long-serving board member, William Baker, as chief executive.
Callaway said Thursday that it continues to search for a new CEO.
It was unclear if a rival suitor will emerge considering that industry growth is basically flat and Callaway has struggled to find hit products, said Dennis McAlpine, manager director of McAlpine Associates, a securities research firm in Scarsdale, N.Y.
Nike Inc. has been rumored to be a potential Callaway buyer but isn't known for acquisitions, McAlpine said. Beaverton, Ore.-based Nike has its own brand of clubs, balls, golf shoes and other golf equipment.
"You may have a golf addict who has a lot of money," he said.
The Times reported that during a meeting Monday of a board committee formed to review the offer, Callaway's top executive team unanimously endorsed the bid.
The newspaper reported that the board is said to be divided over the offer and that some members were campaigning to oust Baker as chief executive in favor of Anthony Thornley, who joined the board last year and is due to step down July 1 from his post as president of Qualcomm Inc., the San Diego-based wireless equipment company.
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