By Kane Wu and Joyce Lee
HONG KONG/SEOUL (Reuters) -South Korean fashion retailer F&F Co said on Monday it has hired Goldman Sachs to advise on an acquisition of TaylorMade, and that it would take legal action if the owner of the global golf products maker proceeds with a separate sale process.
Earlier this year Centroid Investment Partners, a Seoul-based private equity firm, hired JPMorgan and Jefferies to run a sale process of Carlsbad, California-headquartered TaylorMade which it had acquired in 2021.
The sale, according to two people familiar with the transaction, could fetch $3.5 billion.
On Monday, F&F said it participated in the 2021 TaylorMade acquisition as “a strategic investor and, as the largest investor, secured written Consent Rights over key management matters, including borrowing, major business decisions, and equity sales”.
F&F, however, has not consented to Centroid’s current effort to sell TaylorMade, and views it as a significant breach of its contractual consent rights, it said in a statement.
“We are methodically preparing to exercise our Right of First Refusal (ROFR), should circumstances warrant, to ensure alignment with our original investment thesis,” the company stated.
“Independent of our acquisition plans, we are fully prepared to deploy all available legal and contractual measures to hold Centroid accountable for its violations.”
Under the terms for the acquisition of TaylorMade by Centroid, F&F said it invested 358 billion won ($258 million) of the subordinated equity investment totalling 619.2 billion won, making it the largest equity investor as a limited partner (LP).
Centroid has not disclosed the financial details of the 2021 acquisition.
The mezzanine investment amounted to 471.5 billion won, with F&F contributing 195.7 billion won.
The fashion firm had already announced its intent of acquiring TaylorMade last month, saying it made a substantial investment in TaylorMade in 2021 with the ultimate goal of acquiring the company.
Centroid’s advisors have sent confidential information memoranda and process letters regarding the sale of TaylorMade to prospective buyers, the people said, adding no official process has been launched yet. The people could not be named as the information was confidential.
Centroid, in response to a Reuters request for comment, confirmed it was undergoing a process of selling TaylorMade to maximize its LPs’ return on investment.
F&F is an LP investor in a fund operated by Centroid as the general partner (GP), the private equity firm said.
In private equity, GP refers to the manager of a fund who is responsible for making investment and operational decisions while LPs are investors in the fund who usually have a more passive role in individual deals.
Centroid confirmed F&F holds the right of first refusal which it intends to guarantee.
“The right of first refusal is a right that allows the holder to determine whether or not to implement it once prices and conditions are determined through the auction process, and it is contradictory to want to stop the sale while hoping to exercise the right,” Centroid said.
The firm declined to comment further while JPMorgan, Jefferies and Goldman Sachs declined to comment.
Founded in 1979, TaylorMade produces golf clubs, balls and other accessories and has offices in Canada, China, Japan, South Korea and Australia outside the U.S., its website shows.
The company could not be immediately reached for comment outside U.S. hours.
($1 = 1,387.3900 won)
(Reporting by Kane Wu in Hong Kong and Joyce Lee in Seoul; additional reporting by Heekyong Yang in Seoul; Editing by Chizu Nomiyama )
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