Callaway Golf Receives a Second Buyout Offer
A second bidder has teed up an offer for Callaway Golf Co., increasing the chances that the world's largest club manufacturer will be taken private, according to sources with knowledge of the situation.
Bain Capital Inc., a Boston-based investment firm, and MacGregor Golf, one of the oldest names in golf equipment, put a joint, all-cash offer on the table a week ago that values Callaway, best known for its Big Bertha line of clubs, at as much as $1.24 billion, sources said.
A spokesman for Bain declined to comment on a possible deal, as did MacGregor President Dana Shertz. Callaway spokesman Larry Dorman said "no substantive discussions currently are underway."
At about $16.25-a-share, the offer would be slightly higher than an unsolicited, all-cash offer made in late May by buyout firm Thomas H. Lee Partners and the insurance giant Fidelity National Financial Inc.
Thomas Lee and Fidelity had made their bid contingent on securing financing. Sources close to that team said Wednesday that the partners informed the Callaway board last week that funding was in place for an offer that values the company at $16 a share, or about $1.2 billion.
"We haven't delivered anything formal," said William Foley, Fidelity's chief executive, adding that he and his bidding partners did not want to be perceived as making a hostile gesture or giving the board an ultimatum. But he said the bid, which Callaway has not responded to, would not be extended indefinitely.
"We've tried to be very patient," Foley said, adding that his team might be willing to pay more than $16 a share if a review of Callaway's books revealed no surprises.
Both buyout offers are above Callaway's stock price, which has been hovering around the $15-a-share mark since the Thomas Lee-Fidelity offer was first reported in The Times in June. Before that, the stock had been trading below $11 a share. The stock closed Wednesday at $14.90, unchanged.
Callaway has hired New York investment banking firm Lazard Ltd. to explore strategic options including a possible sale. To date, the board has not held any negotiations with either bidder.
Callaway has struggled to fill a leadership void created by the 2001 death of Ely Callaway, its charismatic founder.
This week, the company's board named George Fellows chief executive, a move that some investors viewed as evidence that the board was intent on remaining independent. Fellows, a former Revlon chief executive, was hired to replace William Baker, who had been serving as interim chief since a management shake-up at the company last summer.
