Bowlero Lands SPAC Deal: Reopening, Media And Sports Betting Could Add Upside

The largest owner and operator of bowling centers worldwide is going public with a SPAC deal announced Thursday morning.

The SPAC Deal: Bowlero announced a SPAC merger with Isos Acquisition Corp ISOS valuing the company at a pro forma enterprise value of $2.6 billion.

A PIPE of $450 million includes investments from Apollo Global, Soros Fund Management and Wells Fargo & Co WFC. The company said the order book for the PIPE was 7x oversubscribed.

Public shareholders of ISOS will own 14.5% of the company after the merger. The new company with trade on the NYSE under the ticker "BOWL."

Isos Acquisition Corporation is led by George Barrios and Michelle Wilson, both formerly of World Wrestling Entertainment, Inc. WWE.

About Bowlero: With 321 centers in North America, Bowlero is the market leader in a highly fragmented industry. The company has 286 centers in the U.S., seven in Mexico and two in Canada along with 26 centers signed under a letter of intent.

The company’s upscale brands include Bowlmor Lanes and Bowlero along with the traditional bowling brand AMF.

The industry has more than 3,500 independently owned bowling centers. Bowlero is eight times larger than its next largest competitor that has 44 bowling centers.

Bowlero will also upgrade around 180 Bowlero centers to boost returns.

Growth Ahead: The company lists an addressable market size of $4.5 billion for the U.S. bowling market in its presentation, growing 50% over the last ten years. Bowling is the largest participatory sport in the U.S. according to the company with 70 million people bowling each year.

Among the items the company will focus on for growth are media monetization, gamification and sports betting.

Bowlero acquired Professional Bowler’s Association (PBA) in 2019. PBA has a media deal with Fox Corp FOX that includes more than 70 hours per year. PBA had over 23 million viewers in 2020, which was its largest viewing audience ever. Media projects with a development firm and Netflix Inc NFLX were mentioned in the presentation.

Gaming is another area of focus for growth with Bowlero adding arcades to its centers and also pushing into mobile games. A partnership with Skillz Inc SKLZ includes a game that was downloaded over 95,000 times.

Sports betting was mentioned in the presentation with an existing partnership with FoxBet and others in current discussions.

The company is also focused on the monetization of real estate. The company has purchased bowling centers with adjacent land and purchased the land it currently leases for several centers. In the future, the company will consider forming a REIT or continuing sale-leasebacks.

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Financials: The COVID-19 pandemic hurt the financials for the company that generates a majority of revenue from in-person events.

The company had a trailing twelve-month revenue run rate of $742 million in February 2020. Revenue totals by segment were $390 million for retail, $156 million for league, $140 million for events and $56 million for amusement.

Bowlero had revenue of $513 million in fiscal 2020 and is projecting revenue of $373 million for fiscal 2021. The company forecasts $758 million in revenue for fiscal 2022. Revenue is expected to grow 7.9% annually from 2018 to 2023.

The company had EBITDA of $163 million in 2020 and sees EBITDA hitting $242 million in fiscal 2022.

ISOS Price Action: ISOS shares are trading up at 0.71% at $9.95 on Thursday.

Related link: Want to know more about SPACs? Then tune into "SPACs Attack" on Benzinga's YouTube channel.