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Callaway Golf to Acquire TravisMathew for $125.5 Million

Continuing to plant its flag in markets adjacent to its core business, Callaway Golf Co. said Aug. 3 that it agreed to buy clothing retailer TravisMathew LLC for $125.5 million in cash.

The Huntington Beach company makes golf apparel, leisure apparel, socks, underwear and luggage. TravisMathew has four freestanding stores, including one in the University Towne Center mall, and sells its products at Nordstrom department stores.

Callaway (NYSE: ELY) said it signed a definitive agreement to buy the business, which it expects to close in the third quarter. TravisMathew will keep its headquarters in Huntington Beach.

Callaway announced in January that it was buying Utah-based bag maker Ogio for $75.5 million cash.

“We are very excited about this acquisition,” Callaway CEO Chip Brewer said in a prepared statement. “With its golf heritage, culture of product excellence and double-digit growth in the golf and lifestyle apparel business, TravisMathew is a great fit with our business, brands, culture and our strategy to grow in areas tangential to golf.

“This acquisition, once completed, is expected to be slightly accretive to earnings in 2018 and create significant value for our shareholders over the long-term.”

The sale price is subject to a working capital adjustment.

TravisMathew offers a distinctive Southern California style and a sense of humor. Among its products is a $45 putter cover showing badly bent golf clubs with the words “Golf Sucks.”

The purchase price values TravisMathew at a multiple of approximately 11.8 times projected 2017 full year adjusted EBITDA — that is, earnings before interest, taxes, depreciation and amortization.

In 2017, TravisMathew’s net sales are expected to be in the range of $55 million-$60 million.

Callaway intends to finance the transaction with cash on hand and borrowings from its asset-backed credit facilities. Latham & Watkins LLP acted as legal counsel and Lazard acted as financial adviser to Callaway.

Also on Aug. 3, Callaway announced second quarter net sales of $305 million, a 24 percent increase over the year-ago quarter. Net income was $31 million, down from $34 million one year ago.

The business reported $62.0 million in cash on June 30, down from $126 million in June 2016.


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