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September 19, 2007

QuickSilver is Shopping Cleveland Golf

posted by MR WAVETHEORY at 9/19/2007 07:23:00 AM
QuickSilver (NYSE ZQK) just acquired the 36% of Roger Cleveland Golf Co that it doesn't own according to SEC filings. Yes, it's the QuickSilver that sells surf wear and apparel. QuickSilver does over $2 billion in sales a year so the Cleveland Golf part of it is basically a nonevent as far as the business goes. The Rossignol family originally owned the Cleveland stake and brought it with them when QuickSilver acquired Rossignol. Golf Week is spreading a rumor that QuickSilver is preparing to sell Cleveland Golf. Golfweek thinks TaylorMade-Adddas could buy them, as could Puma.

I used a Cleveland Launcher a while ago when I played some golf. The black and yellow color scheme looks really nice on their clubs. The Cleveland clubs were really nice to play but I think the company has changed strategy recently. I visited a few golf stores recently and Cleveland has definitely gone downstream - as in reduced the price of its clubs to reach more buyers. The clubs were piling up. Maybe that explains the sale.

The price tag: a cool $60 million. Industry sources say Quiksilver Inc., which acquired Cleveland in 2005 as part of a deal to buy ski-maker Rossignol, is in the final stages of unloading the golf equipment maker for roughly $60 million to $70 million. Some analysts say the price is a bargain, noting Cleveland likely is worth at least $100 million, but they add an expedient sale even at a discount is in Quiksilver’s best interests.

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