Callaway to buy remainder of Topgolf

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On Tuesday, October, 27th, Callaway and Topgolf announced that they would be merging with Callaway agreeing to buy the remaining stake in the driving range entertainment business in an all-stock deal.

Callaway, which first invested in Topgolf in 2006, already owned 14% of the company. The terms of the merger imply Topgolf’s equity value at approximately $2 billion.

Topgolf shareholders are expected to receive an additional 90 million shares, bringing their ownership up to 48.5% of the combined company.

The brand which is known for its clubs and golf balls will now enter the world of fast-growing sports-entertainment business.

Topgolf, based in Dallas, operates about 60 entertainment centers in the U.S. and elsewhere that offer virtual golf-related games as well as lessons and host private parties. It generated about $1.1 billion in revenue in 2019 and has grown at a 30% compound annual rate since 2017, the companies said.

“Together, Callaway and Topgolf create an unrivaled golf and entertainment business,” said Callaway Golf CEO Chip Brewer. “We’ve long seen value in Topgolf and we are confident that together, we can create a larger, higher growth, technology-enabled global golf and entertainment leader.”

Callaway shares have gained just 3.54% since the turn of the millennium as interest in golf has waned from the days of Tigermania – when Tiger Woods dominated the game.

Topgolf, which has grown at a 30% compound annual rate since 2017, generated about $1.1 billion in revenue last year. Callaway, meanwhile, had $1.7 billion of sales.

Revenue from the combined company is expected to be split 30% golf equipment, 46% Topgolf and 24% softgoods.

The deal is expected to close in early 2021.

 

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