Topgolf Callaway Brands Corp. is considering selling its California-based Callaway Golf business, according to a report from South Korea’s Chosun Daily news outlet that was picked up by multiple sites including Bloomberg.
According to the reports, the golf equipment maker would be valued at nearly $3 billion. Topgolf Callaway Brands Corp.’s major shareholders – BlackRock Advisors LLC, Providence Equity Partners LLC and Thomas Dundon – have selected a lead manager to explore possible deals.
The New York Stock Exchange share price for Topgolf Callaway Brands Corp. surged more than 12 percent to more than $16 in the wake of the reports, as of noon Wednesday. That put the company’s market cap at $2.98 billion. Topgolf Callaway Brands Corp.’s stock price had dropped from a 12-month high of $22.87 on April 21, 2023, to a low of $10.05 on November 10. In 2024, it has traded in the $13-$14 range
Reports indicate that the major shareholders want to spin off Topgolf, the entertainment brand with technology-boosted driving ranges and extensive food-and-beverage operations. Callaway Golf Co. closed a deal in March of 2021 to acquire the remainder of Topgolf Entertainment Group it didn’t already own, valuing the driving range chain at about $2 billion. The merger resulted in the name Topgolf Callaway Brands Corp.
Chip Brewer, Topgolf Callaway’s CEO, said during its Q4 2023 earnings conference call on February 13, “Topgolf’s track record for selecting and opening venues is extraordinary. They virtually all do well, and average opening results have exceeded our targets. …
“In addition, our venues are increasingly profitable over time with, what we believe, is a clear path to further upside. I’ll even add we have now shown we can do this in the face of same venue sales volatility. In short, the venues are achieving the return targets we communicated and are long, durable and appreciating assets.”
During the same call, Brewer predicted that Topgolf would have more than 30 million visitors to its facilities in 2024 before giving a strong report about Callaway’s club sales.
“Our U.S. dollar market share placed us as the number one club brand and the number two golf ball brand,” Brewer said. “In clubs alone, we were the number one in total clubs, drivers, fairway woods, hybrids and irons. ”