Callaway Wins Top-Flite With $174.4-Million Bid

A Delaware bankruptcy judge Thursday approved Callaway Golf Co.’s offer to buy Top-Flite Golf Co. for $174.4 million in cash and assumption of debt after Germany’s Adidas-Salomon backed out of the bidding for the U.S. golf ball maker.

Carlsbad-based Callaway, maker of Big Bertha drivers and the No. 1 seller of woods, irons and putters, said in July that it would pay $125 million for Chicopee, Mass.-based Top-Flite. Addidas subsequently offered $126 million for Top Flite’s assets, which include the Ben Hogan and Strata brands.

Bidding for Top-Flite at an auction scheduled by the Bankruptcy Court began about 10 a.m. Wednesday and ended when Adidas withdrew after 1 a.m. Thursday.

“We had developed an acquisition price that we were willing to pay, and when the price at auction exceeded our perceived value of the assets, we chose to cease bidding,” said John Steinbach, a spokesman at Adidas’ TaylorMade Golf Co. in Carlsbad.

“This is an attractive and exciting acquisition for Callaway Golf ,” Ron Drapeau, Callaway’s chairman, president and chief executive, said in a statement. “The transaction will combine Callaway Golf’s position as No. 1 in woods, irons and putters with Top-Flite’s position as the No. 2 manufacturer and seller of golf balls worldwide.”

While Callaway has positioned its golf balls as a premium product -- costing $35 to $40 a dozen -- Top-Flite’s balls retail for about $20 a dozen.

In July, Callaway’s golf ball sales fell 30% from the year-earlier period, RBC Capital Markets analyst Carole Buyers told Bloomberg News.

In the near term, Callaway will gain savings by consolidating some aspects of its two golf lines, said analyst Bud Leedom, who tracks Callaway for Wells Fargo Securities.

Callaway also said it accepted nearly all of Top-Flite’s 43 endorsement deals with tour professionals, including Jim Furyk, who won the U.S. Open this year.

Callaway Golf expects to close the deal by the end of this month.

Callaway stock Thursday rose 5 cents to $15.50 on the New York Stock Exchange. Callaway’s share price has increased 17% since the start of the year.