A Happy Gilmore wedding... Golf classic Callaway, known for making fancy clubs and golf balls, is buying the rest of "open-air entertainment" company Topgolf, known for Vegas bachelor parties and gram-able pics. Callaway already owns 14% of the party favorite. Now it's doubling down with an all-stock merger that values Topgolf at ~$2B – more than Callaway’s even worth. A Haiku on Topgolf stats:
- $1.1B sales in 2019
- 23M customers around the globe
- 63 Topgolf-run entertainment centers
The Lazertag of golf... could be key to helping old-school Callaway (and golf in general) attract younger players — especially now that golf is having a mini-renaissance as one of the few socially distant sports. According to Callaway CEO Chip Brewer, “Topgolf is the best thing that happened to golf since Tiger Woods." That's because...
- 50% of Topgolf’s customers don't identify as golfers. Chip thinks it'll be the biggest breeder of newbies for the industry.
- But Callaway stock fell 19% on the deal. Callaway shareholders will own ~51.5% of the married company, but some don't think the debt and dilution involved is worth it. Also...
Conversion isn't a sure-thing... Callaway is hoping that the people who show up in basketball shorts to pound seltzers at Topgolf will become the people who spend $700 on a golf set for a five-hour round. Topgolf could be the "gateway" for youngsters to develop a life-long love of golf — but investors aren't so sure.