UNDATED (WKRC) – Topgolf Callaway Brands announced its intent to spin-off Callaway Golf and Topgolf into two separate companies just three years after their merger.
Topgolf Callaway Brands Corp. announced Wednesday that the company intends to separate the Callaway Golf and Topgolf brands through a spin-off.
“Over the last decade plus, we have transformed Callaway into the #1 brand in golf equipment, while building a successful and complementary apparel and accessory business. We believe this business, on a stand-alone basis, will be well understood and valued by the market. 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,”Chip Brewer, Topgolf Callaway Brands president and CEO said in a statement.
“Looking forward, we remain convinced that Topgolf is a high-quality, free cash flow generating business with a significant future value creation opportunity. Topgolf is transforming the game of golf and is expected to deliver substantial financial returns over time. 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,” commented Chip Brewer, President and Chief Executive Officer of Topgolf Callaway Brands.”
The announcement comes after Topgolf Callaway Brands saw its stock price drop more than 24% since January of this year.
According to GolfDigest, Callaway had been an early investor in Topgolf and had as much as a 14% stake in the company at one time since 2006, when it made its original investment. The merger of the companies was first announced in October of 2020 and was finalized in March of 2021.
“Callaway and Topgolf are just better together. Callaway’s leadership in the global golf equipment market and geographic diversity, combined with Topgolf’s revolutionary technology platform and access to golfers of all abilities, will allow both companies to accelerate growth and create competitive advantages. This transformational merger has already created and will continue to create meaningful shareholder value. We are very excited to begin this next chapter and I cannot wait to see what we can accomplish together.” Brewer said at the time of the merger.
Citing financial statements,GolfDigest reported that the separation could be finalized in the second half of 2025, possibly by July 1. The company said it plans to spin-off at least 80.1% of Topgolf “to obtain the desired tax-free treatment of the spin-off for tax purposes and will also consider retaining a limited ownership in Topgolf for a period of time.”
“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.” Brewer said. “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.”
