Topgolf Callaway Brands Corp. announced plans to split its business into two separate entities, potentially through a spinoff of Topgolf into a standalone public company.
The decision comes just over three years after the merger between Topgolf, the popular driving-range and entertainment chain, and Callaway, a leading manufacturer of golf equipment, in 2021.
The company stated that separating the two brands would enable each to thrive independently, highlighting their different operating models and capital needs. Chief Executive Officer Chip Brewer explained that Topgolf and Callaway have distinct investment profiles, and the board believes both would benefit from going their own ways. A spinoff of Topgolf, which is expected in the second half of 2025, is the most likely route, though other options are being considered.
The merger in 2021 was initially viewed as a strategic move to create a tech-enabled golf powerhouse. However, as consumer enthusiasm for leisure activities like Topgolf waned amid rising living costs, the combined company struggled to maintain momentum. Topgolf’s revenue and visitor numbers have declined, which has added pressure on the company.
Despite these challenges, Topgolf Callaway’s stock saw a slight rise following the announcement, though it remains down nearly 25% this year.
The separation will involve Topgolf Callaway retaining 80.1% of Topgolf to maintain tax-free status. Callaway is expected to keep the company’s financial debt, while Topgolf will retain its venue financing obligations without carrying any corporate debt.
Executives remain optimistic about Topgolf’s future, noting its potential for significant growth in the long term. Meanwhile, Callaway will focus on its core business, which includes golf clubs, balls, and apparel brands like TravisMathew and TopTracer.
Market Watch, PR Newswire and Golf contributed to this report.
