The leading action sports group has sold Cleveland Golf to the parent company of Srixon and is now seeking to reduce its involvement in the winter sports equipment business. However, Quiksilver’s management has made it clear that it wants to hang on to the key Rossignol brand in any case, considering that it has potential for expansion in the broad summer and winter outdoor segment as a lifestyle brand.
In announcing Cleveland’s sale, Bob McKnight, chairman of Quiksilver, said in a statement that the group was “continuing to evaluate ways to reduce our exposure to risk in some of our non-core winter equipment businesses, including Dynastar, Lange, Look, Kerma and Risport which, like Cleveland Golf, were acquired in 2005 as part of the Rossignol Group.” Bernard Mariette, president of Quiksilver, said the company was still committed to continued ownership of the hardgoods assets related to the Rossignol brand.
It’s not clear at this stage whether Quik is trying to find a buyer for the secondary niche brands of the Rossignol Group, a process complicated by the fact that they share several manufacturing facilities with the Rossignol brand. Union representatives are afraid that the group may want to close down Dynastar’s original plant at Sallanches, near the Montblanc.
A few weeks ago, Quik had bought all the shares it didn’t yet own in Cleveland. It has now reached a definitive agreement to sell 100% of its equity to SRI Sports Ltd. of Japan for $132.5 million. SRI is a subsidiary of the large Sumitomo Rubber group that handles its golf and tennis equipment operations, largely consisting of the Srixon brand of clubs and accessories and the rights to the Dunlop brand for certain products and certain countries. It had a consolidated turnover of about $470 million last year.
Positioned in the higher end of the golf market, Srixon has been growing quickly in the USA and in Europe. The brand is largely complementary with Cleveland, the dominant player in the market for wedges, which has been diversifying into drivers and irons. Observers feel that Cleveland could be positioned by SRI in the medium segment of the market, between Dunlop and Srixon.
The sale of Cleveland should be completed by next January. Quik, which spent $360 million two years ago to purchase the Rossignol Group and its controlling stake in Cleveland, will use the proceeds from the deal to reduce its indebtedness.
