Topgolf Callaway Brands is reportedly preparing to spin Topgolf into own company while selling off Callaway Golf to a new buyer.
A South Korean investment group is seeking to purchase Callaway Golf for nearly $3 billion, according to a report in the Korea-based Chosun Daily.
Three key Callaway Golf shareholders, including BlackRock Advisors LLC, Providence Equity Partners LLC and Thomas Dundon of Dundon Capital Partners, have come together and selected a lead manager, according to the report. The three entities, which own approximately one-third of the company, are in the process of trying to sell their stakes in the equipment maker.
Topgolf, however, would be spun off into its own company, according to the report.
In a statement this afternoon, Callaway Golf said, “While it is our long-standing practice not to respond to market rumors and speculation, in light of today’s unusual market activity, coupled with a recent media report originating in Korea regarding discussions of a potential sale of the Company or its golf equipment business, we confirm that we are not aware of any such discussions. We do not intend to comment further on this topic, and we assume no obligation to make any further announcement or disclosure should circumstances change.”
In March 2021, Callaway Golf completed its full acquisition of Topgolf, after investing in the company early in its existence with $50 million for a 20 percent stake in the company back in 2006. The shocking purchase, which valued Topgolf at approximately $2 billion, led to the combined company ultimately being renamed Topgolf Callaway Brands. The company also owns apparel makers Travis Mathew and Jack Wolfskin, as well as golf bag and luggage maker Ogio. Topgolf Callaway also has made a strategic investment into indoor golf bar chain Five Iron Golf with a $30 million minority stake. The company also acquired Topgolf competitor BigShots in November 2023 for $29 million.
For 2023, Topgolf had revenue of $1.76 billion. However, the Topgolf debut profile is substantial and was a crucial facet of the Callaway acquisition, with Callaway taking on Topgolf's $555 million in debt. At the time, capital was cheap with interest rates low. Now, however, that's not the case in the wake of quantitative tightening by central banks around the world.
Topgolf Callaway Brands stock rose some 14 percent on the NASDAQ on Wednesday, bringing its market capitalization to the approximate rumored asking price for Callaway Golf, $2.98 billion. Topgolf Callaway Brands' 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, 2023. It had recently been trading in range of the $13-$14 per share.
A Callaway sale would mean the top three equipment brands in the world are owned by Korean firms. Titleist parent Acushnet was acquired by FILA Holdings Corp. in 2011. KBS Capital Partners sold TaylorMade to Seoul-based private equity firm Centroid Investment Partners LC in 2021.
