Going Public - Acushnet IPO Set For 2016?

[GolfSpy_X]

Acushnet Company, which owns golf brands such as Titleist and Footjoy, chose U.S.-based Solebury Capital to advise on a potential IPO which could value the company at about $1.8 billion, a source with direct knowledge of the matter said.

 

The initial public offering is expected to take place in 2016 although the value and venue are yet to be decided, the source said on Tuesday, declining to be identified as they were not authorised to talk to the media.

The Korea Economic Daily reported earlier on Tuesday that Acushnet was expected to complete a listing around 2016, likely in New York, with an estimated market capitalisation of 2 trillion won ($1.81 billion), citing a high-ranking source at Mirae Asset.

 

 

 

Acushnet was bought by Fila Korea Ltd and Fila's South Korean partners such as Mirae Asset Private Equity for $1.23 billion in 2011. Fila and Mirae spokesmen confirmed that an IPO was being considered, but gave no further details.

According to the terms agreed upon its acquisition, an IPO would allow Fila Korea to boost its stake in Acushnet to about 33 percent from 12 percent in 2011, as well as clear liabilities incurred in the purchase.

Analyst Seo Young-hwa, of LIG Investment & Securities, wrote in a December report that an Acushnet IPO was expected next year.

 

Acushnet's earnings before interest, taxes, depreciation and amortisation rose from $120 million at Fila Korea's acquisition to an estimated $185 million in 2014, he added.

 

Via: Reuters

[JBones]

Fila, huh?  This is interesting.  Fila has really come out with some nice golf apparel in the last few years.  I hope they keep the Titleist name, I think the Fila name will degrade it a little, no matter how good the product is.

[markb]

Getting rid of the debt after the highly leveraged take-over and increasing your ownership stake at the same time.   Don't you just love capitalism?   But will this IPO float in this market at this time.   Expect to see some more stories about what a tremendous cash cow the ball division is and how Titleist's a steady earner in all climates, etc.

[GolfSpy Barbajo]

Am I reading this right?  Fila is going to have Acushnet go public and - as markb says - eliminate debt and increase their ownership?  Smart business - any could very well provide some capital to make some investments in the brand.  Best of all, as a public company, we'll get to see the annual reports, which are always fascinating...

 

So is this a good thing or a bad thing for Acushnet?  If there is capital investment, gotta think it's a good thing.  And the pre-tax, etc earnings look substantial - note they didn't say net profits or gross profits, so one must believe that Acushnet is a money-maker.  If you're going to go public, you might as well do it when the numbers are strong.

[BIG STU]

Actually a smart move. Think how many golfers like us on MGS would buy stock if only a few shares or am I simplifying it too much? I don't claim to know a lot about the market but I do piddle with penny stocks from time to time. I would definetly buy a few shares myself

[Jmikecpa]

Deals like this bring a tear to my eye....but I think that any CFO would say that.  It is a smart move if it works and tapping into foreign markets is the way to go these days as they can tolerate steady returns with modest gains more so than the US market can.

[markb]

Deals like this bring a tear to my eye....but I think that any CFO would say that.  It is a smart move if it works and tapping into foreign markets is the way to go these days as they can tolerate steady returns with modest gains more so than the US market can.

 

Yeah Mike, but will this IPO float at present?   I guess it depends on what initial offering price they stick on it.   Too high and the balloon doesn't float.  I mean sure, Titleist is the THE platinum golf brand to attract attention, but surely Wall Street senses that golf is not a hot growth industry, potential investors are not going to believe hockey stick growth projections.   They're going to see the ball division cash cow, chunking out steady returns and factor that in with slight growth, at best.  The rest of the products are just market share points that may tick up or down, but probably not do much.  

 

My gut tells me they overpaid in 2011 and now their debt servicing is killing them.  But what do I know.

[Jmikecpa]

Without seeing the financials it is hard to say if it floats or it does not, but from the view of the ball market they are the premium name and I would assume they have a steady revenue stream with decent margins.  The equipment industry is not what it used to be and that is for sure so I can't say that this would be big splash in the equity market right now.  Foreign investment is getting a lot or traction right now with the uncertainty in China and the growth of wealth in some of the developing countries where golf equipment still sells at a premium (for US brands anyway).  It will be an interesting case study once the financial data becomes completely public in the S1 filing and the insight in the MD&A would at least be an interesting read.  

 

On the debt servicing side I would not think the load would be crippling since most of these deals are really backloaded in amortization payments and the interest cost on that amount of money should be overcome very easily.  Normally when I structure these deals I load the interest into the principal for at least the first 24 to 28 months (non-compounding) and keep the quarterly amortization payments at 5% per quarter or less with a balloon at the end.  The general Idea is that the balloon will never come due as a refi will happen before that point. 

[SPY ZINGER]

Without seeing the financials it is hard to say if it floats or it does not, but from the view of the ball market they are the premium name and I would assume they have a steady revenue stream with decent margins. The equipment industry is not what it used to be and that is for sure so I can't say that this would be big splash in the equity market right now. Foreign investment is getting a lot or traction right now with the uncertainty in China and the growth of wealth in some of the developing countries where golf equipment still sells at a premium (for US brands anyway). It will be an interesting case study once the financial data becomes completely public in the S1 filing and the insight in the MD&A would at least be an interesting read.

 

On the debt servicing side I would not think the load would be crippling since most of these deals are really backloaded in amortization payments and the interest cost on that amount of money should be overcome very easily. Normally when I structure these deals I load the interest into the principal for at least the first 24 to 28 months (non-compounding) and keep the quarterly amortization payments at 5% per quarter or less with a balloon at the end. The general Idea is that the balloon will never come due as a refi will happen before that point.

*Golf Clap*

[markb]

I'll bet the margins on balls aren't just decent, I'll bet they are cocaine cartel good.

[Hula Rock]

I'll bet the margins on balls aren't just decent, I'll bet they are cocaine cartel good.

 

........we are about to find out in the very near future...

[Jmikecpa]

I'll bet the margins on balls aren't just decent, I'll bet they are cocaine cartel good.

My assumption as well but need to look at the conservative side. I would guess that all in they are well north of 50%.

[wbealsd]

Steady returns with modest gains always make me smile