Topgolf Callaway Brands Inc. announced it is separating its golf equipment and golf entertainment businesses into two separate, standalone companies.
The split comes just three and a half years after Callaway acquired Topgolf in March 2021 and the two companies merged.
Callaway will consist of the company’s existing golf equipment and active lifestyle businesses, as well as Top Tracer, and is expected to retain all of the existing liabilities of the Topgolf Callaway brand.
Topgolf will not take on financial debt and will be funded by a “significant cash balance,” but new venue development plans for 2025 will be reduced to the “mid single-digit range.”
Callaway reported revenues (including Top Tracer) of $2.5 billion over the 12-month trading period from Q2 2023 to Q2 2024, while Topgolf reported revenues of $1.8 billion over the same period.
Callaway will be led by CEO Chip Brewer, while Artie Stars will remain as CEO of Topgolf.
Brewer said of the separation: “Over the past decade, we have transformed Callaway into the number one brand in golf equipment and have developed a successful, complementary apparel and accessories business that we believe will be well understood and valued by the marketplace on a standalone basis.”
“Since our merger with Topgolf, we have made significant investments in the Topgolf business, dramatically expanding its scale, digital capabilities and venue profitability. These investments, combined with the hard work of the Topgolf team, have positioned us to exceed our initial growth and free cash flow expectations.”
“Looking forward, we believe Topgolf is a high quality free cash flow generating business with significant future value creation opportunities. Topgolf is transforming the game of golf and is expected to deliver significant financial benefits over the long term. At the same time, Topgolf has a different operating model, capital structure and investment thesis than Callaway and, as a result, the Board has determined that separating Topgolf will best serve the success of Topgolf and Callaway and maximize shareholder value.”
“Today’s announcement is the result of a thorough strategic review conducted by our board of directors and management,” said John Lundgren, executive chairman of Topgolf Callaway Brands Inc. “By creating two independent companies, each with distinct focuses and proven business models, we aim to enhance the continued momentum of both businesses and deliver value to all shareholders.”