Carlsbad, California, United States: Topgolf Callaway Brands Corp has announced its intention to separate its equipment and golf entertainment businesses into two independent companies.

The split comes 3½ years after the two companies merged following Callaway’s acquisition of Topgolf in March 2021.

Callaway will consist of the company’s existing golf equipment and active lifestyle businesses, as well as Toptracer, and is expected to retain all existing Topgolf Callaway Brands financial debt.

Topgolf will have no financial debt and be funded with ‘a significant cash balance’, but new venue development plans for 2025 to be reduced to ‘mid-single digit range’.

Callaway reported revenues of US$2.5 billion (including Toptracer) over the 12-month trading period from Q2 2023 to Q2 2024, while Topgolf reported revenues of US$1.8 billion over the same timescale.

Callaway will be led by Chief Executive Chip Brewer, while Artie Starrs will remain as Chief Executive of Topgolf.

Brewer said: “Over the last decade plus, we have transformed Callaway into the number one 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.

“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 maximise shareholder value.”

John Lundgren, Chairman of the Board of Directors of Topgolf Callaway Brands, added: “This 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.”

The company said it expects to execute the spin-off of Topgolf in the second half of 2025, ‘but there can be no assurance regarding the ultimate timing or terms of the separation or that the separation will ultimately occur’.