As golfers stormed Pebble Beach, Calif., for the US Open Thursday, the world’s largest golf club manufacturer found itself under attack by an activist investor.
Barry Rosenstein’s Jana Partners unveiled a 9.2 percent stake in Callaway Golf and is urging the company to consider putting itself up for sale, according to a regulatory filing Thursday.
Shares of Callaway soared 14.4 percent on Jana’s investment.
Jana argues that Callaway’s shares are “undervalued” and that the company — which sponsors Phil Mickelson — should consider selling some, if not all, of itself.
Callaway paid $476 million for German outdoor brand Jack Wolfskin in January but said in May that it expects the brand’s revenues dip below previous estimates.
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Although Callaway chief executive Chip Brewer said in January that Jack Wolfskin provides “long-term synergies” with Callaway’s other brands, some on Wall Street thought the acquisition was out of step with Callaway’s mix of golf and tennis apparel and equipment.
Jana recruited a trio of industry experts who also have small stakes in Callaway to push the company to make changes — bringing the total activist stake to 9.5 percent.
Former Jarden chief executive James Lillie invested alongside Jana, as has Cynthia Davis, former president of Nike Golf; and Roger Farah, former vice chairman at Ralph Lauren.
Callaway acknowledged Jana’s investment Thursday and said its goal is to explore ways to create shareholder value.
“As a policy, we do not comment on individual shareholders, but the board and management, as a practice, is open to having a dialogue with all of our shareholders in accordance with all of the SEC regulations,” the company said.
Callaway is Jana’s first new activist position of 2019. The fund has previously made plays at Jack in the Box, Whole Foods and Tiffany. In January, Jana told investors that it was shutting down two of its equity funds to focus on activist strategies.
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