American Brands agrees to acquire club maker Cobra Golf for $700 million
NEW YORK -- American Brands Inc., already a leading seller of golf balls, has agreed to acquire Cobra Golf Inc., the maker of King Cobra clubs, for $700 million.</br></br>News of American Brands' agreement to pay $36 a share sent Cobra shares soaring 29%, or $7.875, to $35.50 on the Nasdaq Stock Market, while American Brands shares closed down 4.9%, or $2.25, to $44.125 in composite trading on the New York Stock Exchange.</br></br>The combination of the maker of the Titleist golf clubs and balls and Foot-Joy gloves and shoes with the maker of oversized and graphite-shaft golf clubs ends months of speculation that American Brands planned to buy a premium club maker. Cobra or Callaway Golf Co., the maker of the Big Bertha brand, were the likely targets. Callaway was off 5%, or $1, to $19 a share in Big Board composite trading.</br></br>Over the past year, American Brands has been restructuring its operations, selling off its domestic tobacco and insurance units for $2.2 billion to focus on its brandname businesses. In addition to its sporting good business, American Brands products include Jim Beam and Old Grand-Dad bourbons, hardware and home improvement brands of Moen faucets and Master Locks, and Day-Timer and Swingline office products.</br></br>Nonetheless, the golf business has been one of its fastest growing operations, said Thomas C. Hays, American Brands' chairman and chief executive officer, with Titleist showing "superb, sustained growth" over the past few years. The unit now contributes about 9%, or $79.1 million, of American Brands total operating profit of $843.2 million for the first nine months.