Topgolf Callaway Brands Corp. recently announced its intention to separate its two primary businesses, Topgolf and Callaway, into two independent companies. The decision to pursue this separation comes after Callaway Golf Co. acquired the remaining shares of Topgolf Entertainment Group in March 2021, valuing the driving range chain at around $2 billion. The resulting joint company was named Topgolf Callaway Brands Corp, but rumors of a possible breakup began circulating in March of this year.
In August, Topgolf Callaway reported second-quarter revenue of $494 million, with total revenue for the first six months exceeding $917 million. However, despite these overall revenue increases, same-venue sales were down 8 percent, with existing Topgolf locations experiencing a slowdown in traffic. The company’s stock performance has also been disappointing, with its value steadily decreasing since reaching a high in May 2021.
The decision to separate the two businesses into independent entities is intended to drive continued momentum and deliver value to shareholders. Callaway will focus on the golf equipment part of the business, along with Toptracer and lifestyle brands such as TravisMathew, OGIO, and Jack Wolfskin. On the other hand, Topgolf will concentrate solely on its entertainment business, which includes over 100 driving range-entertainment centers worldwide.
Topgolf plans to reduce its new venue development for 2025 to a mid-single digit number and believes that the separation will best position both companies for success. The company expects to spin off the Topgolf business to Topgolf Callaway Brands’ shareholders in a tax-free transaction for U.S. federal income tax purposes. While a spin-off into a standalone public company is the most likely separation path, the company will continue to evaluate other options for separation to maximize shareholder value.
The separation of the brands is projected to be completed in the second half of 2025. This move signifies a strategic decision by Topgolf Callaway Brands Corp. to unlock the full potential of each business unit and capitalize on their distinct operating models and capital needs. By separating into two independent companies, Topgolf and Callaway aim to maximize their potential for growth and success in their respective markets.
Affiliate partnerships and product recommendations may also play a role in the company’s future strategy, as Golfweek operates independently and may earn affiliate fees from purchases made through recommended links. As the company prepares for the upcoming separation, investors and stakeholders will be closely watching to see how this decision impacts the performance and market position of both Topgolf and Callaway in the years to come.
