The U.S. Bankruptcy Court in Delaware on Wednesday established a process and a timetable for the sale of substantially all the assets of The Top-Flite Golf Company, approving Callaway Golf's initial bid of $125 million to be the “stalking horse” bid under a process where other qualified bidders will have the opportunity to submit “higher and better” offers.
The court rejected a request filed by adidas-Salomon AG to replace Callaway Golf as the “stalking horse” bidder in the bankruptcy process. That request had been filed after Callaway Golf and Top-Flite had announced their agreement. The parent of TaylorMade-adidas Golf said it was willing to top Callaway's bid by $1 million, and forgo the breakup fee that Callaway was asking.
The $3.75 million breakup fee and expense reimbursement provisions initially proposed as a part of Callaway Golf's bid have been eliminated, and any competing bid must also exclude any request for breakup fee or expense reimbursement.
Under the Court's approved bidding process, parties interested in submitting a bid must become “qualified” and submit a bid not later than August 27, 2003.
To date, adidas-Salomon, Russell Corporation and Callaway have been officially designated “qualified bidders,” and several others have indicated an interest in becoming qualified. We would expect Nike, Acushnet and several other companies to be in the hunt as well.
Bids must now provide for an aggregate purchase price of at least $1.0 million over ELYs bid, and be on terms that are not “materially more burdensome or conditional” than the Callaway bid.
If one or more qualified bids are received by the deadline, then an auction will be held on September 3, 2003. All qualified bidders that submitted a qualified bid will be permitted to participate in the auction process on that day. Top-Flite will select the best qualified bid presented during the auction.
Top-Flite will have to make the final determination if a bid submitted by a suitor other than Callaway would likely be consummated if selected. If no one ups the ante over the Callaway deal on the table, then the auction process will not occur and ELY walks away with the prize and
On September 4, 2003, Top-Flite will submit the best bid received during this process to the Bankruptcy Court for approval.
Although this ruling levels the playing field for everyone, Callaway still feels they are one step ahead of the pack because they have also completed the antitrust review process required by the Hart-Scott-Rodino Premerger Notification Act — something that any other bidder would need to complete and a process that could prove difficult for an Acushnet bid based on current market share numbers.
