The speculation can finally end. For months, golf industry observers have been wondering who was going to snap up Cleveland Golf and the Never Compromise brand of putters from surf duds company Quiksilver. The surprise suitor is the parent company of Srixon, Sumitomo Rubber Industries, a leading Japanese tire company.
Quiksilver has agreed to sell Cleveland Golf to the SRI Sports Limited division for $132.5 million. The deal is expected to close during the fiscal quarter ending Jan. 31.
Aparently, Quiksilver had second thoughts about becoming the "leading outdoor sports company," and wanted to get closer to their roots - surfing apparel. The company will be keeping Rossignol, however, which they purchased in 2005 in a deal that also brought along Cleveland Golf. In reality, ski-maker Rossignol was probably Quiksilver's primary target in the first place. Cleveland Golf just came along in the deal. When profits turned south earlier this year, Quiksilver was quick to indicate their willingness to part with Cleveland. It was probably the right move. There would appear to be a lot more synergy between surfing and skiing (and especially snow boarding) than between surfing and golf… beyond Will Mackenzie and Adam Scott, anyway.
SRI is the victor of a bidding war that included, most notably, TaylorMade-Adidas, but also Puma and Bridgestone. Though Quiksilver never formally announced that Cleveland was for sale, the company's availability has been widely known for months. In June, Quiksilver CEO Robert McKnight Jr. acknowledged that Quiksilver was "looking at every possible alternative concerning the hardgoods" and that "everything is on the table."
What will the new deal mean for the Cleveland and Srixon brands? Srixon is very big in Japan behind only Tourstage/Bridgestone, and though its following is growing in the US, it's still a little hard to find. Cleveland on the other hand is number four in the huge US market. It seeems like a pretty good fit. Srixon will likely be the players' club brand (think Titleist), and Cleveland will target its clubs to everyman (ala Cobra). One would also expect that the Srixon ball and the Cleveland wedge brands will continue, pretty much as they are now. The bit players in this opera are Dunlop and XXIO, which are also owned by SRI Sports Limited.
"We are very excited to add the Cleveland brand and business to our operations," said Ryochi Sawada, Chairman of the Board of SRI Sports Limited. "Cleveland has a clear position of dominance in the important wedge market and a fast-growing presence in drivers and irons. We believe that this business will prove highly complementary to our own. We are looking forward to demonstrating Cleveland’s full potential to the market and believe that the business can benefit greatly from our stewardship."
As for the official Cleveland line, Greg Hopkins, President of Cleveland Golf, said, "We are excited by the many positive aspects of this deal, including the combination of a great brand in golf with a new organization that is completely and solely devoted to the sport. Significantly, their operating model is set up to anticipate and respond to the seasonality and other specific requirements of the golf market. We believe that this singular focus will benefit the entire Cleveland organization in a number of ways. Each of the three companies involved - Cleveland Golf, Quiksilver, and our new parent SRI Sports - benefit in significant ways as this transaction will positively affect the futures of all three companies."
Time will tell if this will be a happier fit for Cleveland Golf. But on the face of it, the deal seems like a solid pairing. I suspect we may see Srixon clubs start to show up next spring in the same places we've always found their new Cleveland siblings. That could be a win for Srixon, Cleveland, and a lot of golfers as well. Now… what are the chances that Vijay will wind up playing Srixon clubs or that Furyk will switch to Cleveland?