F&F Holdings Co., a South Korean fashion retailer and the largest strategic investor in TaylorMade, has entered a head-to-head showdown with Centroid Investment Partners, hiring Goldman Sachs to advise on its bid for the golf club and apparel maker.
The move could stall the Seoul-based private equity firm’s attempt to exit the golf company, which it acquired for $1.7 billion or 1.8 trillion won in 2021 with the backing of F&F.
On Monday, F&F signed an advisory deal with Goldman on its acquisition offers for TaylorMade, according to investment banking sources.
The advisory deal followed Centroid’s recent announcement of plans to divest the US company by appointing JPMorgan and Jeffries as its sale managers.
However, F&F protested the sale plan, saying it failed to win its consent and therefore violated its contract with Centroid.
For the $1.7 billion acquisition of TaylorMade, F&F contributed 550 billion won ($400 million), making it the golf brand’s largest strategic investor. Based on the exchange rate at the time, its investment accounted for less than one-third of the acquisition price.
Its investment consisted of 200 billion won in mezzanine financing and 350 billion won in subordinated equity.
The terms of the investment require Centroid to obtain prior consent before putting TaylorMade on the market, or taking it public, while granting F&F preferential rights over other bidders to acquire the company.
ADVANTAGE OVER OTHER BIDDERS
Despite escalting tensions with the PE house, F&F sees itself ahead of other bidders, citing the preferential rights.
Investment bankers acknowledge its view, saying Goldman’s decision to advise F&F indicates the firm believes the contract between F&F and Centroid is still valid.
“Global investment banks like Goldman Sachs examine the legal risks and client obligations closely before taking on advisory roles,” said an investment banker.
“The fact that Goldman Sachs agreed to advise F&F suggests it sees a high likelihood of F&F acquiring TaylorMade,” he added.
F&F’s participation in the acquisition deal would likely edge out other potential bidders, which include Chinese private equity firms, according to the sources.
LEGAL ACTION
Apart from the bid process, F&F repeated its intention to pursue legal action against the PE firm. It contents that the latter’s sale attempt seriously undermines rights guaranteed under the terms of the contract.
“Regardless of our acquisition preparations, we will mobilize all available measures, including legal action, to hold Centroid accountable for the breach of contract that have already take place,” F&F said.
By Jong-Kwan Park
pjk@hankyung.com
Yeonhee Kim edited this article.
