Callaway and Topgolf Entertainment Group have announced that the companies have entered into a merger agreement.
Under the terms of the agreement, Callaway and Topgolf will combine in an all-stock transaction creating a global golf and entertainment leader. The number of shares to be issued is based upon an implied equity value of Topgolf of approximately $2 billion, including the 14% already owned by Callaway.
“Together, Callaway and Topgolf create an unrivaled golf and entertainment business,” said Chip Brewer, president and chief executive officer of Callaway.
“This combination unites proven leaders with a shared passion for delivering exceptional golf experiences for all – from elite touring professionals to new and aspiring entrants to the game,” said Brewer.
“We’ve long seen the value in Topgolf and we are confident that together, we can create a larger, higher growth, technology-enabled global golf and entertainment leader,” he added.
“Callaway’s strong financial profile will enable the combined company to accelerate innovation, develop exciting new products and experiences and create compelling value for shareholders, while providing the dedicated teams of both companies more opportunities to showcase their talents and complementary capabilities,” he said.
Dolf Berle, chief executive officer of Topgolf, agreed.
“We are excited to join the Callaway family and strengthen the experiences we create at the intersection of sports and tech-driven entertainment,” said Berle.
“Fueled by a tremendous team of associates and a diverse offering across our venues, Toptracer, and media platform, Topgolf is truly changing the landscape of the industry by making golf more inclusive and accessible to people of all ages, demographics and skill levels,” he said.
“As part of Callaway, we plan to grow our leadership position by leveraging Callaway’s brand reputation, industry relationships and financial strength to connect more communities around the world to the Topgolf experience.” said Berle.
Callaway first invested in Topgolf in 2006, and the partnership includes an exclusive golf partnership agreement at all Topgolf venues.
“Since its inception, Topgolf has created an innovative, tech-inspired twist on the golf driving range experience, turning it into a global entertainment and sports movement. Our track record of creativity and diversity of offerings will only grow stronger as part of Callaway, a global leader in the industry,” said Erik Anderson, executive chairman of Topgolf.
“All of us are looking forward to building new experiences, reaching new audiences and solidifying our digital infrastructure as we connect communities around the globe,” said Anderson.
The combined company will have a diversified revenue mix, including golf equipment at 30 per cent,Topgolf at 46 per cent and soft goods, 24 per cent.
Under the terms of the merger agreement, Callaway will issue approximately 90 million shares of its common stock to the shareholders of Topgolf, excluding Callaway, which currently holds approximately 14 per cent of Topgolf’s outstanding shares.
Upon completion of the merger, Callaway shareholders will own approximately 51.5 per cent and Topgolf shareholders (excluding Callaway) will own approximately 48.5 per cent of the combined company on a fully diluted basis.
The number of shares issued is based upon an implied equity value of Topgolf of $1.986 billion (including Callaway’s ownership position). The number of shares issued is also based upon a fixed price of Callaway common stock of $19.40 per share.
Callaway will assume Topgolf’s net debt, which is estimated to be $555 million at closing, resulting in an estimated enterprise value for Topgolf of approximately $2.5 billion.
The combined company’s board of directors will consist of 13 directors, including three directors appointed by Topgolf shareholders.
Brewer will continue to lead the combined company as president and CEO. Berle will continue to lead the Topgolf business through a transition period following the close of the transaction, at which time he intends to step down to pursue other leadership opportunities.
John Lundgren will continue as chairman of the board of the combined company, while Erik Anderson will serve as vice chairman.
Topgolf will continue to operate from its headquarters in Dallas, Texas.
The transaction is expected to close in early 2021.