Titleist IPO Aims For The Green

The golf Industry is about to undergo some massive restructuring. Last month, it was announced Adidas is moving forward selling its golf Segment, including Taylor-Made, one of the biggest equipment brands in golf. Some top analysts have been down on the golf equipment business and have advocated to steer clear of the industry.

Amid all the negativity surrounding the golf industry, some of the biggest news for the game broke last week. Golf equipment manufacturer and leader Titleist announced its plan to move forward with an IPO, expected to launch later this year.

Titleist parent company, Acushnet, is preparing to register for an IPO expected to be valued as high as $2 billion. Acushnet produced more $200 million in EBITDA in the past 12 months and has been working with Investment Banks JPMorgan, UBS, and Nomura for the IPO. Acushnet also owns Footjoy, a leader in the golf shoe space.

Despite the struggling golf equipment industry, the Acushnet IPO suggests the golf ball and apparel market remains strong amid weak golf club sales. Titleist has been the No. 1 ball in golf for decades; golf balls and shoes are considered consumable goods with a much higher turnover sales rate than golf clubs, which are considered durable goods.

The Titleist IPO will be an important gauge of the golf industry as a whole, and will be the second major golf brand to be traded publicly along with Callaway Golf Co (NYSE: ELY). Callaway has been performing well this year, and has successfully diversified its business with a key stake in Top Golf, a growing golf entertainment venue that launched its flagship location on the Las Vegas strip this month.

The golf equipment industry is an $8.7 billion business, with the US accounting for 41 percent of sales while Japan and South Korea were second and third in sales with 24 percent and 7.1 percent, respectively.

With golf entering the Olympics this year in Brazil, it will be a big opportunity to increase its exposure internationally and attract a fan base that may not otherwise be exposed to the game.