Topgolf Callaway is moving forward with a plan to split the company in two.
Topgolf Callaway
Three years after Topgolf and Callaway joined forces for it create Topgolf Callawaythe two sides announced their intention to go their separate ways in 2025.
In an announcement Wednesday, Topgolf Callaway Brands Corp., the company that oversees the two brands, confirmed it will move forward with a plan to split the company in two, potentially through a Topgolf spinoff next year.
The reason for the change of heart? Topgolf Callaway believes that brands are stronger on their own.
“We believe this business, on a standalone basis, will be well understood and appreciated by the market,” said Chip Brewer, president and chief executive officer of Topgolf Callaway. “Since our merger with Topgolf, we have made significant investments in the Topgolf business that have dramatically expanded its scale, digital capabilities and venue profitability. These investments, combined with the hard work of the Topgolf team, have allowed us to exceed our initial growth and free cash flow expectations.”
Topgolf’s listed spinoff into a “standalone public company” in the second half of 2025 is the most likely path to the split. However, other demerger options are also being considered in the name of shareholder value. In other words, nothing is certain. What is certain is that Topgolf Callaway believes the two brands “represent distinct and compelling investment opportunities” on their own.
Under the proposal, Topgolf Callaway would divest “at least 80.1 percent” of Topgolf to “obtain the desired tax-free treatment of the spinoff for U.S. federal income tax purposes.” Also under consideration is “holding a limited ownership interest in Topgolf for a period of time.”
“Topgolf has a different operating model, capital structure and investment thesis than Callaway, and as a result, the Board has determined that the separation of Topgolf will best position Topgolf and Callaway for success and maximize shareholder value,” Brewer said. .
Callaway first invested in Topgolf in 2006, before increasing its stake to 14 percent in 2018. Two years later, in 2020, both parties joined and eventually changed its name to Topgolf Callaway, in March 2021, when Callaway completed a full stock purchase ($2.66 billion) of Topgolf Entertainment Group.
News of a spin-off comes six months later a report from South Korea Chosun Daily claimed that Callaway could be broken up and put up for sale so that management could focus solely on its high-tech Topgolf driving ranges. Shortly after the report surfaced, Callaway released a statement confirming they were “not aware of any such discussions.”
Topgolf Callaway’s current portfolio includes Callaway, Topgolf, Travis Mathew, TopTracer, Jack Wolfskin, Odyssey, OGIO and World Golf Tour.
Want to overhaul your bag for 2024? Find a convenient location near you at True Spec Golf.
