Adams Golf hires Morgan Stanley to explore its strategic options

Adams Golf's new Speedline F12 driver

Adams Golf Company (ADGF: NASAQ) has engaged Morgan Stanley & Co. to help it look for a strategic buyer. The Plano, Texas, based equipment company board of directors unanimously decided to explore and evaluate what it called “strategic alternatives” for the purposes of enhancing shareholder value. Basically that means the board wants to see its stock price rise. Considering potential buyers is one way increase the stock price – at least in the short term.

Adams Golf’s stock price finished today at $7.16 per share, an increase of nearly 13.5 percent from its opening price. The stock traded as high as $7.25 per share today.

“As we continue to strengthen the Adams Golf brand, the entire board thinks the current market valuation is inconsistent with the company’s performance and future prospects,” said Adams Golf President Chip Brewer.

Indeed, Adams Golf’s stock price has not kept up with its success. The company, founded by Barney Adams, has had considerable success with its Idea irons and hybrids. Its Speedline F11 line of drivers and metal woods met with good reviews last year. The company last week introduced its new Speedline F12 line of drivers and metal woods. Brewer is considered one of the golf industry’s top executives.

The company reported sales of $84.8 million through the first nine months of 2011 compared to $74 million the same period in 2010. It reported earnings of $7.6 million in the first nine months of 2011 compared to $7.3 million the same period in 2010.

Just because Adams Golf says it’s looking around, however, doesn’t mean it has to move forward with any kind of sale. While the company’s board said it intends to consider “the full range of available options,” it also said that it has not made a decision to pursue any specific strategic alternative at this time. It also said there is no definitive timetable for the process.


Leave a Reply

  • (will not be published)