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Callaway Golf Reaches Deal to Buy the Rest of Topgolf

Callaway Golf will buy the remainder of Topgolf in a deal that values the driving-range operator at about $2 billion.

Callaway Golf  (ELY) - Get Callaway Golf Company Report reached an agreement to buy the shares of Topgolf Entertainment Group that it doesn't already own in a deal that values the driving-range operator at about $2 billion.

Callaway, the maker of Big Bertha drivers, already owns a roughly 14% stake in Topgolf. Callaway has a market value of about $2 billion.

The Wall Street Journal reported Tuesday that the companies were discussing a deal.

“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 Chip Brewer, CEO and president of Callaway Golf, in a statement after markets closed Tuesday. “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." 

Dallas-based Topgolf operates about 60 entertainment centers in the U.S. and elsewhere that offer virtual golf-related games and lessons and host private parties.

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The company, whose investors also include the Providence, R.I., private-equity firm Providence Equity Partners, had been mulling going public, the Journal reported.

Topgolf's outdoor driving ranges have been popular during the coronavirus pandemic as people look for ways to safely socialize outside their homes.

Callaway Golf said on its most recent earnings call in August that it expected the coronavirus pandemic to hurt its sales through next year.

But the company said demand for equipment and apparel has been recovering more quickly than expected partly because golf enables social distancing.

Callaway Golf shares were falling 17.61% on Wednesday to $15.89 as the deal is expected to be dilutive until 2025.