Blockbuster deal: Callaway announces merger with Topgolf
Callaway Golf is one of the largest and most respected golf equipment manufacturers in the world. Topgolf has established itself as a brand that successfully combines technology, entertainment and sport, attracting golfers and non-golfers alike in 58 locations across America.
On Tuesday evening it was announced that the two companies would merge.
"Callaway and Topgolf together form an unrivaled golf and entertainment business," said Chip Brewer, Callaway President and CEO, in a press release. "This combination brings together proven leaders with a shared passion for exceptional golfing experiences for everyone - from elite touring professionals to new and aspiring players."
Brewer will lead the combined company upon completion of the merger. Dolf Berle, the current CEO of Topgolf, will continue the Topgolf business during the transition period, then step down and leave the company.
Topgolf will join Ogio, Travis Mathew and Jack Wolfskin under the Callaway brand.
Callaway made its first investment in Topgolf in 2006 and already owned 14 percent of the company. The transaction announced on Tuesday is an all-stock deal. Callaway will issue approximately 90 million common shares to non-Callaway shareholders of Topgolf based on Topgolf's implied equity value of $ 1.986 billion.
The first time many people played golf was at a top golf venue attracted by the nightclub-like atmosphere, food and drink, high-tech games, and non-competitive environment. During a conference call Tuesday evening, Berle said that all of the top golf venues in the US had reopened by early September. Recent operating sales are back at 80 to 85 percent of sales at the same location in 2019. He added that 33 new venues are being planned and see approximately 200 potential locations for top golf venues in the US.
Topgolf not only has 58 locations in the USA, but also Toptracer. This technology is used in television broadcasts so that viewers can follow the balls as they fly through the air. This technology is also being introduced to driving ranges in the form of the Toptracer Range so that golfers can see the ball flight of their strokes while practicing on screens, smartphones or tablets.
Toptracer video screen at Pebble Beach Golf Links during the 2019 US Open
According to Brewer, Topgolf is ideally suited to address the challenges of the COVID-19 pandemic during the conference call. Loose bays are far apart, usually with physical barriers between groups.
Topgolf was particularly appealing to Callaway, with 23 million visitors to Topgolf venues in 2019, according to Topgolf. Fifty-one percent of the people who visited a Topgolf facility last year identified themselves as non-golfers, but 75 percent of these people said that after visiting Topgolf they were interested in playing golf on a course. If Callaway can develop relationships with people as they discover the game and learn to love it, it stands a better chance of turning those people into loyalists to Callaway, Odyssey, Ogio, and Travis Mathew.
The merger is expected to be completed in early 2021.
TopGolf is opening a unique facility in Augusta, Georgia
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