CARLSBAD, Calif., Jan. 4, 2019 /PRNewswire/ -- Callaway
Golf Company (NYSE: ELY) announced today that it has completed the previously announced acquisition of Jack Wolfskin for €418
million, or approximately $476 million assuming a 1.140 Euro to US
Dollar conversion rate, subject to a working capital adjustment.
Jack Wolfskin is an international, premium outdoor apparel, footwear and equipment brand. The company designs premium products
targeted at the active outdoor and urban outdoor customer categories. The acquisition furthers Callaway's push into the active
lifestyle category after its successful 2017 acquisitions of TravisMathew and Ogio. Post-acquisition, Jack Wolfskin will continue
to operate out of its Idstein, Germany headquarters.
"We are very excited to have completed this acquisition and have the Jack Wolfskin brand as part of the Callaway portfolio,"
commented Chip Brewer, President and Chief Executive Officer of Callaway. "We believe Jack
Wolfskin fits extremely well with our current brands and furthers our stated plan of strategic investments in complementary
areas. Jack Wolfskin provides an innovative product offering with long-term synergies to the existing soft goods portfolio.
We look forward to partnering with the Jack Wolfskin management team to maximize this brand's growth potential."
"We are thrilled to be joining Callaway's growing portfolio of premium, active lifestyle brands," said Jack Wolfskin's Chief
Executive Officer Melody Harris-Jensbach. "The Callaway team has proven over many years that they are great innovators and brand
builders. We are excited to have them invest in our brand and are eager to start working with them."
Callaway financed the transaction with a $480 million Term Loan B facility, which was led by
BofA Merrill Lynch and JP Morgan Securities LLC. The facility has a seven-year term, subject to certain prepayment rights, and
bears interest at a rate of LIBOR plus 4.50%. The Term Loan B market weakened during the period the Company marketed the loan to
investors and therefore the estimated annual financing costs will be approximately $0.05 per share
higher than previously estimated. As a result, Callaway currently estimates that this transaction is expected to be approximately
$0.11 per share dilutive for full year 2019 and slightly accretive in 2020, both on a non-GAAP
basis, which excludes non-recurring transaction costs and non-cash purchase accounting adjustments. The Company intends to
provide further guidance on a GAAP basis once it has completed its purchase accounting adjustments. Full year 2019 adjusted
EBITDA, which excludes transaction costs and non-cash purchase accounting adjustments, is still estimated to be approximately
$33 million for the Jack Wolfskin business. The Company remains excited about adding this premium
brand to its portfolio and the strategic benefits and long-term potential this acquisition provides.
Latham & Watkins LLP acted as legal counsel to Callaway for the acquisition and Gibson Dunn & Crutcher acted as legal
counsel to Callaway for the Term Loan B facility. JP Morgan Securities LLC acted as exclusive financial advisor to Callaway for
the acquisition. Kirkland & Ellis International LLP acted as legal counsel and Houlihan Lokey
as exclusive financial advisor to Outdoor Holdings SCA - the holding company of Jack Wolfskin. THM Partners acted as director of
and advisor to the Jack Wolfskin Group.
Forward-Looking Statements
Statements used in this press release that relate to future plans, events, financial results, performance or prospects, and
statements relating to the expected benefits of the Jack Wolfskin transaction, including future synergies and growth
opportunities, and the estimated financial results and sales and earnings contribution from Jack Wolfskin, are forward-looking
statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are based upon current
information and expectations. Accurately estimating the forward-looking statements is based upon various risks and unknowns,
including unanticipated difficulties or expenditures relating to the transaction or the realization of the anticipated synergies
and growth opportunities; the response of customers, suppliers and others to the announcement of the transaction; potential
difficulties in employee retention as a result of the transaction; consumer acceptance of and demand for the Company's products;
the level of promotional activity in the marketplace; unfavorable weather conditions; future consumer discretionary purchasing
activity, which can be significantly adversely affected by unfavorable economic or market conditions; future retailer purchasing
activity, which can be significantly negatively affected by adverse industry conditions and overall retail inventory levels; and
future changes in foreign currency exchange rates and the degree of effectiveness of the Company's hedging programs. Actual
results may differ materially from those estimated or anticipated as a result of these risks and unknowns or other risks and
uncertainties. For additional information concerning these and other risks and uncertainties that could affect these statements,
see Callaway's Annual Report on Form 10-K for the year ended December 31, 2017 as well as other risks and
uncertainties detailed from time to time in Callaway's reports on Forms 10-K, 10-Q and 8-K subsequently
filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. Callaway undertakes no obligation to republish revised forward-looking
statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
About Callaway Golf
Through an unwavering commitment to innovation, Callaway Golf Company (NYSE: ELY) creates products designed to make every
golfer a better golfer. Callaway Golf Company manufactures and sells golf clubs and golf balls, and sells bags, accessories and
apparel in the golf and lifestyle categories, under the Callaway Golf®, Odyssey®, OGIO, and TravisMathew brands worldwide. For
more information please visit www.callawaygolf.com, www.odysseygolf.com, www.ogio.com, and www.travismathew.com.
About Jack Wolfskin
Jack Wolfskin is one of the leading providers of functional outdoor clothing, footwear and equipment in Europe and the largest franchisor in the German specialist sports retail market. JACK WOLFSKIN articles are
currently available in more than 3,000 points of sale across the globe. JACK WOLFSKIN articles feature a high degree of
functionality, user-friendliness and innovation. In recent years, JACK WOLFSKIN successfully introduced numerous material and
product innovations. The company is a member of Fair Wear Foundation and a bluesign® system partner. JACK WOLFSKIN has also been
a member of the "Zero Discharge of Hazardous Chemicals" initiative since 2012. Jack Wolfskin is the official provider of apparel
for the Innsbruck Alpine School. For more information please visit www.jack-wolfskin.com
CONTACT:
Brian Lynch
Patrick Burke
(760) 931-1771
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SOURCE Callaway Golf Company