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Callaway Golf Buying Topgolf In $2B All-Stock Transaction

Topgolf, which currently counts 63 facilities, will have more financial capital to pursue expansionGETTY IMAGES

Callaway Golf is "buying trendy driving-range outfit" Topgolf in an "all-stock transaction" valued at $2B, according to Mike Freeman of the SAN DIEGO UNION-TRIBUNE. The deal "would provide Topgolf with additional financial heft to pursue expansion plans beyond its current 58 venues in North America." Before COVID-19 restrictions, Topgolf reportedly "explored going public at a valuation" as high as $4B. Callaway already owns 14% of Topgolf, as it first invested in the company in '06. Callaway President & CEO Chip Brewer, who has been a member of Topgolf's board since '12, said that while a "potential merger was discussed over the years, talks failed to advance until now." Under terms of the merger, Callaway "will issue 90 million shares to the owners of Topgolf, excluding Callaway's stake." If completed, Callaway shareholders will own 51.5% of the "combined company," while Topgolf shareholders will own 48.5%. Callaway also "will assume" Topgolf's $555M in debt. Shareholders of both companies "must approve the transaction." Topgolf investors Providence Equity Partners, WestRiver Group and Dundon Capital Partners "announced support for the deal" (SAN DIEGO UNION-TRIBUNE, 10/28). GOLFWEEK's David Dusek noted Brewer "will run the combined company after the completion of the merger." Topgolf CEO Dolf Berle "will continue to lead the Topgolf business through the transitional period, then step down and leave the company." Topgolf will join the Ogio, TravisMathew and Jack Wolfskin brands under the Callaway umbrella (GOLFWEEK.com, 10/27).

SHAKE UP: GOLF DIGEST's Tod Leonard notes the deal "comes amid a big upswing in business for Callaway as golf has experienced a boom in participation and sales during the coronavirus pandemic." Callaway is estimating that it will have net sales of $476M in the third quarter that ended on Sept. 30, up 12% over last year. The company said that its e-commerce is "thriving," including a 108% increase in "soft goods sales this year." Topgolf has 63 locations around the world, and it reports "having more than 23 million guests" in '19, with more than 50% of users "identifying themselves as 'non-golfers'" (GOLFDIGEST.com, 10/28).

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