Callaway announces huge $1 billion sale in industry shake-up

One of the largest and most powerful mergers in golf has come to an end, with Callaway Golf announcing that it is unloading its majority stake in TopGolf in a deal valuing the driving range chain at over $1 billion USD.

Topgolf Callaway Brands Corp., as it was officially known, will shed the first half of its moniker as the merger it completed back in October 2020 came to an end on Tuesday, dissolving what was by some distance the largest entirely golf-focused company in the industry in terms of revenue.

Known for its highly tech-led, interactive experience and popularity among casual groups and passionate players alike, TopGolf has grown to become perhaps the world's most famous driving company in the last 20 years, with 96 locations in the United States and more than half a dozen international venues including four in the UK.

Recognising TopGolf's potential early, Callaway first invested in the company back in 2006, going on to acquire a majority stake and complete a merger with the company just over five years ago. However falling stock prices led Callaway to announce last year that it was pursuing selling its stake in Topgolf last year, splitting the two entities back into independent companies.

"As we considered various alternatives to separate Topgolf, including a potential spin-off transaction, we received interest from a number of parties," Topgolf Callaway President and CEO Chip Brewer said in a statement. 

"After a robust process and a thorough evaluation of a range of alternatives, we believe this sale is the best outcome for our shareholders, as well as our employees and other stakeholders. This transaction is highly attractive in that it provides the company with both significant proceeds and substantial upside in the continued growth of Topgolf."

Under the terms of the sale, 60% of Callaway's Topgolf stake will transfer to Los Angeles private-equity firm Leonard Green, the former expecting $770 million in net proceeds from the sale and retaining 40% of its former stake.

Leonard Green will now become the principal shareholder in Topgolf, while the company formerly known as Topgolf Callaway Brands Corp. will be renamed back to Callaway Golf Company. 

Leonard Green will also take a controlling stake in Toptracer, the ball-flight analytics and gaming technology brand used at Topgolf's ranges, as part of the deal.

The announcement comes as the latest in a string of moves by Callaway aimed at refocusing the company's intent more centrally towards its core strength of producing golf equipment. The company also offloaded German outdoors and camping brand Jack Wolfskin earlier this year, selling it to Chinese sportswear giant ANTA for a reported $290 million.

Callaway will, of course, remain one of the most powerful entities in golf, retaining control over much-loved brands like Odyssey, OGIO and TravisMathew. 

The California-based brand was also the number-one selling equipment manufacturer in golf for the 2024 financial year and the industry's second-biggest ball manufacturer behind Titleist.