Callaway Golf agrees to buy remainder of Topgolf

Callaway Golf Co. has agreed to buy the remaining stake in driving-range chain Topgolf Entertainment Group in an all-stock deal.

The deal values Topgolf at $2 billion, including the 14% of the company that Callaway already owns. Topgolf shareholders are expected to receive an additional 90 million shares, bringing their ownership up to 48.5% of the combined company.

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“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.”

Topgolf’s driving ranges, which allow players to order food and drinks and compete against their friends, breathe new life into Callaway’s business.

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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.

Proforma revenue is approximately $2.8 billion and is expected to grow to $3.2 billion by 2022 and by approximately 10% annually over the following years.

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Topgolf CEO Dolf Berle will help guide the combined company through a transition period before stepping down to pursue other opportunities.

The deal is expected to close in early 2021.