Callaway Golf Company President Chip Brewer did his best this past week to defend his company’s decision to acquire apparel company TravisMathew for approximately $125.5 million in cash. The deal (for 12 times projected TravisMathew EBITDA) is a big multiple – one that looks even bigger given the spotty track records of golf hardgoods companies that get into the softgoods business.
The sale is expected to close in the third quarter of this year, with TravisMathew continuing the out of its Huntington Beach, Calif., headquarters.
“It’s about a management and select opportunity here,’’ Brewer told Wall Street analysts. “Others have struggled with it. We’re hiring here a business that has got a very strong team. It’s a select opportunity and obviously we’re quite bullish on it.
“But everybody can have their own opinion on that one. We’re not the same operators as others and I think our track record would indicate that there’s reason to believe it when we say we’re going to be able to operate something successfully.’’
Brewer called TravisMathew a “dynamic brand’’ that has been growing very quickly and one that he expects will continue to grow.
“We also think that there will be synergies through the combination of the companies, although we are going to keep TravisMathew as an independent brand and separate physical entity, based up there in Huntington Beach,’’ Brewer said. “But certainly, within golf channels, we think we can help each other. We believe that from an international perspective, we can provide significant value as well. There are some select operational efficiencies that we’ll be able to garner, and we think the brands overlap very strongly, and there’ll be some brand development and advocates and such that will likely add value to each other going forward.’’
Brewer said the TravisMathew acquisition won’t negatively impact Callaway’s existing apparel license with Perry Ellis, which it signed in 2012.
“That (partnership) has been very successful and we’re very positive on that and that ongoing relationship, and now the TravisMathew opportunity,’’ Brewer said. “These are select approaches based on different circumstances, and I think all of them create the right opportunity, and we’re bullish about each of them, although they’re different approaches.’’