Callaway Set To Split Topgolf Into Separate Company - With A Sale Not Ruled Out

Callaway Topgolf Brands has announced a separation of the two companies into individual entities, with the possibility of Topgolf being sold off not being ruled out.

The two companies announced their merger back in October 2020, with it being signed and completed in March 2021, but after what a statement describes as a "strategic review" the decision has been made that they would be better served operating separately.

Topgolf Callaway Brands president and CEO Chip Brewer said in a statement that a spin-off of the Topgolf brand into its own separate company is being planned.

“Topgolf is transforming the game of golf and is expected to deliver substantial financial returns over time," said Brewer.

"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 position Topgolf and Callaway for success and maximize shareholder value.”

Topgolf Callaway Brands stock price has tumbled 24% since January and Topgolf's venue sales have also dropped since last year, both factors acknowledged by Brewer.

“As we look forward, we remain convinced that Topgolf is a high-quality business with significant future opportunity,” Brewer said. “It is transforming the game of golf, and we believe it will deliver substantial growth and financial returns over time.

“At the same time, we have been disappointed in our stock performance for some time, as well as the more recent same-venue sales performance. As a result, we are in the process of conducting a full strategic review of Topgolf. This review includes the assessment of organic strategies to return Topgolf to profitable same-venue sales growth, as well as inorganic alternatives, including a potential spin of Topgolf.”

Although Brewer insists Topgolf can be a thriving business via the spin-off, he did not rule out them selling the brand, which has over 100 venues across the USA and worldwide.

“We have evaluated all of the options in front of us and we're viewing the spin as attractive and that it's likely to create significant shareholder value,” Brewer said.

"If there is an identified and actionable path that could include a sale or another path that is more attractive for shareholders, we will obviously explore that path.

“Our primary and most likely path is the spin, and we believe that will create significant shareholder value. But we are both open to considering and we will explore other strategic options.”

Topgolf Callaway Brands denied they were in discussions with the Saudi PIF over a sale in March, as reported by South Korean newspaper Chosun Daily.

Phil Mickelson, for so long the face of Callaway, even responded saying "what a great idea" it would be for the Saudi PIF to purchase Topgolf Callaway Brands and that "I pray it happens".

That speculation was largely over the entire portfolio though, and first and foremost to align LIV Golf with the powerful Callaway golf manufacturing brand, which includes Odyssey, Ogio, Travis Mathew and Toptracer.

Brewer states in this announcement, though, that it is Topgolf that is being spun-off and only that company would be up for sale, with the rest of the Callaway golfing brand very much remaining together and aligned.

"Over the last decade plus, we have transformed Callaway into the No.1 brand in golf equipment, while building a successful and complementary apparel and accessory business," said Brewer. "We believe this business, on a stand-alone basis, will be well understood and valued by the market."