Topgolf Callaway Golf announce decision to split, each to operate independently after strategic review

Topgolf Callaway Golf announced its decision to split into two independent companies. The company will split into Callaway, which will focus on golf equipment and its lifetime business, while Topgolf will specialize in venue-based golf entertainment.

Callaway registered revenue of approximately $2.5 billion in the last twelve months until the second quarter of 2024, while Topgolf did approximately $1.8 billion. The company will go with separation through a spin-off, and the process will be tax-free.

The notice issued by Topgolf Callaway Brands said that the company plans to spin off Topgolf into a new public company. At the same time, they are also considering other options to maximize shareholder value.

Chip Brewer, President and Chief Executive Officer of Topgolf Callaway Brands, said that in the last 10 years, Callaway has emerged as the No. 1 brand in golf equipment, and the company will be well understood and valued independently in the market.

Brewer said (via NUCLRGOLF):

"Since our merger with Topgolf, we have made considerable 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 outperform our original growth and free cash flow expectations."

Callaway acquired Topgolf in 2021 in a $2 billion deal. The deal aimed to gain on golf's pandemic-era growth and Topgolf’s entertainment-driven approach to attract younger audiences. However, the growth couldn't be sustained by Topgolf after the pandemic as consumer habits changed. Topgolf shares peaked at $37.20 in June 2021; however, their value on Tuesday was $10.32.

"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 position Topgolf and Callaway for success and maximize shareholder value," Brewer further added.

Callaway was founded in 1982, while TopGolf was founded in 2000. In a span, of five years, Callaway saw unprecedented growth from $250 million in 1992 to $3 billion. The Carlsbad-based company had a 14% stake in Topgolf before their merger.

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The future for Topgolf Callaway Golf according to the board members and the CEO

Topgolf Callaway Golf decided to split after a thorough strategic review by the Board. The statement by the company said that following the strategic review it was decided that both Callaway and Topgolf will function independently.

It said that the split would result in benefits for individual businesses, enhancing value for shareholders.

John Lundgren, Chairman of the Board of Directors of Topgolf Callaway Brands, said (via NUCLRGOLF):

"Today's announcement is the result of a thorough strategic review conducted by the Board of Directors and the management team. The creation of two independent companies, each with a distinct focus and proven business model, is intended to drive continued momentum in both businesses and deliver value to all our shareholders."

President and CEO Chip Brewer (via PR Newswire) shed light on what he feels the future of the two brands would hold. The split aims to improve strategic clarity and create new opportunities for both Callaway and Topgolf.

"Our Callaway and Topgolf businesses both employ very talented and dynamic people. I am confident that we will maintain the commitment to excellence that has been key to our success. The focus and other benefits that come from creating two independent companies is expected to provide even greater opportunities for our employees and our brands."

Topgolf Callaway Golf aims to split by the second half of 2025.