Pinnacle Business Management (Prev SRCI)

[BullNBear52]

It's all about balls....

BTW I would never pay that much for a golf ball that has a natural proclivity for water.

CALLAWAY GOLF (NYSE:ELY) -
12:22pm · 13.59 Change +0.37 (+2.80%)



UPDATE - Callaway Golf to buy bankrupt Top-Flite
Monday June 30, 9:02 pm ET

SAN FRANCISCO, June 30 (Reuters) - Callaway Golf Co. (NYSE:ELY - News), the golf equipment maker known for its Big Bertha clubs, said on Monday it had agreed to buy golf ball maker Top-Flite Golf Co. for about $125 million in a move aimed at helping it achieve profitability in its own golf ball business.

Callaway, based in Carlsbad, California, said it expects to record a charge against earnings of up to $70 million in connection with the deal.

Top-Flite filed for Chapter 11 bankruptcy protection on Monday, with a plan to sell its business to Callaway. Top-Flite, based in Chicopee, Massachusetts, said it would have been unable to survive on its own because of its high debt load, totaling more than $538 million.

Callaway, a leader in the golf club market, said it expects the purchase will help it improve its position in golf balls. The company began manufacturing golf balls three years ago, but that part of its business has remained unprofitable, hurt by a a slump in the economy as well as increased competition from Nike Inc. (NYSE:NKE - News) and Adidas-Salomon AG (XETRA:ADSG.DE - News), which entered the golf ball business around the same time.

The purchase will also give Callaway more exposure in the lower-priced golf ball segment, while lowering manufacturing costs. However, Callaway said it plans to keep its own golf ball manufacturing facility in San Diego open, at least through the beginning of next year.

Industry analysts said it was largely expected that Callaway would make an acquisition in a bid to reverse the losses at its golf ball business.

"They have been telling shareholders they would get rid of this loss one way or another by 2004," said Alexander Paris, an analyst with Barrington Research Associates.

He said the Top-Flite purchase was a strategy that made sense, but would still likely keep Callaway in second place, and perhaps a distant second, to the market leader, Titleist.

Callaway said it plans to consolidate the two companies' golf ball and golf club manufacturing and research operations. (Additional reporting by Jeffrey Goldfarb and Deborah Cohen)