Callaway Golf Co. has agreed to acquire the remaining shares in the golf driving range chain Topgolf Entertainment Group in an all-stock transaction.
The transaction valued Topgolf at $2 billion and included 14% of the company that Callaway already owns. It is expected that Topgolf shareholders will receive another 90 million shares, bringing their shareholding ratio to 48.5% of the combined company.
“Callaway and Topgolf have created an unparalleled golf and entertainment business together,” said Chip Brewer, CEO of Callaway Golf. “We have been seeing value at Topgolf for a long time, and we are confident that together we will create a larger, higher growth, technology-driven global golf and entertainment leader.
Topgolf’s practice range allows players to order food and drinks and compete with friends, which injects new vitality into Callaway’s business.
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Since the turn of the millennium, Callaway’s stock price has risen by only 3.54%. This is because Tigermania dominated the game. Since then, people’s interest in golf has started to weaken.
Since 2017, Topgolf’s compound annual growth rate has been 30%, and last year it generated approximately $1.1 billion in revenue. At the same time, Callaway’s sales were $1.7 billion.
The combined company’s revenue is expected to be allocated to 30% of golf equipment, 46% of Topgolf and 24% of soft goods.
Formal revenue is approximately US$2.8 billion and is expected to grow to US$3.2 billion by 2022, and will grow at an annual rate of approximately 10% in the next few years.
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Topgolf CEO Dolf Berle will help guide the combined company through the transition period before resigning to seek other opportunities.
The transaction is expected to be completed in early 2021.