Information on the Target

Bowlero Corp, the leading owner and operator of bowling centers globally, has entered into a definitive agreement with Isos Acquisition Corporation (NYSE: ISOS.U) to merge, facilitating Bowlero's transition to a publicly listed company. Following the completion of this merger, the new entity will operate under the name 'Bowlero' and will be listed on the NYSE with the ticker symbols 'BOWL' for its common stock and 'BOWL WS' for its warrants. The pro forma enterprise value of the combined company is estimated to be approximately $2.6 billion.

Bowlero operates around 300 bowling centers across North America, significantly surpassing its closest competitor in terms of market presence. Since its inception, Bowlero has successfully grown its business and diversified it by acquiring the Professional Bowlers Association. Bowlero's revenue for the twelve months ending February 2020 stood at $746 million, with an EBITDA of $201 million, while forecasted amounts for 2022 indicate revenue of $859 million and EBITDA of $275 million.

Industry Overview

The U.S. bowling industry, valued at $4.5 billion, has experienced robust growth of 50% over the past decade. Bowling stands as the largest participatory sport in the U.S., with approximately 70 million participants annually, indicating a substantial market for bowling entertainment. The industry is characterized by its fragmentation, with over 3,500 independent operators presenting significant opportunities for consolidation and growth.

Bowlero has capitalized on this fragmented landscape by converting and upgrading existing centers while developing new locations. The company generates more than double the average annual revenue per center compared to its competitors, affirming its successful business model and attractiveness within the entertainment market.

The global bowling market, valued at around $11 billion, presents Bowlero with further opportunities as it seeks to position itself as the dominant player through both organic growth and strategic acquisitions. The industry successfully adapted to pandemic-related challenges, evidenced by Bowlero's revenue surpassing pre-pandemic levels despite ongoing capacity restrictions.

Additionally, the out-of-home entertainment market, valued at $100 billion, is ripe for exploration, with Bowlero poised to engage in innovative ventures that integrate leisure, media, and gaming experiences to capture consumer interest.

The Rationale Behind the Deal

This merger enables Bowlero to expand its operational footprint and unlock new revenue streams within the growing bowling and entertainment sectors. The transaction is supported by a $450 million PIPE investment from prominent institutional investors, enhancing Bowlero's financial flexibility to pursue further growth initiatives, including upgrading existing locations and acquiring independent bowling centers.

Moreover, Bowlero's strong management team and strategic vision position the combined entity to capitalize on current market trends and consumer demands, ultimately driving long-term value creation and shareholder returns.

Information About the Investor

Isos Acquisition Corporation, a blank check company, aims to effectuate a merger with a growth-oriented business such as Bowlero, providing a pathway to public listing. Co-CEOs George Barrios and Michelle Wilson lead the company, bringing extensive experience in strategic growth consulting and financial management. Their leadership is complemented by a robust capital investment structure, enabling the execution of the proposed business combination and subsequent growth strategies.

Investors in Isos include affiliates of well-known investment entities such as Apollo Global Management, Soros Fund Management, and Brigade Capital Management, underscoring the high level of confidence in Bowlero's growth potential and its ability to thrive in the evolving entertainment landscape.

View of Dealert

This merger between Bowlero and Isos Acquisition Corporation represents a compelling investment opportunity within the expanding entertainment sector. Bowlero's strong brand recognition, large market share, and proven growth strategy distinctly position it to capitalize on the rebound of the leisure industry post-pandemic. The anticipated EBITDA growth of over 11% annually through 2023 embodies the robust potential for continued success.

The merger allows Bowlero to leverage a significant capital infusion, enhancing its capacity to pursue strategic acquisitions and capitalize on expansion opportunities within a fragmented industry. Consolidating independent operators not only increases market share but can also improve operational efficiencies and enrich the overall guest experience.

Furthermore, Bowlero’s diversification into media, gamification, and events associated with the PBA indicates a holistic approach to growth that transcends traditional bowling entertainment. These initiatives attract a broader audience, generating diverse revenue streams that can reinforce financial stability and profitability.

Overall, Bowlero's solid historical performance, promising financial projections, and strategic initiatives suggest that this merger is a valuable investment not only for existing stakeholders but also for future investors seeking exposure to a dynamic and growing sector.

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