Topgolf Callaway Brands, formed from the merger of Callaway Golf Company and Topgolf in 2021, is negotiating a sale of its entertainment-driven driving-range unit, Topgolf, to Leonard Green & Partners. This potential transaction could value the Topgolf business at approximately $1 billion, as reported by Reuters, citing sources familiar with the discussions.
The strategic rationale behind this deal stems from Topgolf Callaway's declining share value, which has fallen roughly 73% from its post-merger highs, as investor concerns mount regarding the company's performance. In September 2022, Topgolf Callaway announced its intention to split into two distinct entities, a move that indicates a shift towards focusing on its core businesses more effectively. Leonard Green & Partners, which currently holds a minority stake in Topgolf and manages assets worth $75 billion, has reportedly provided feedback on the business to the management team, suggesting a level of interest in a more substantial investment.
The timeline for this deal is still unfolding, but should negotiations proceed favorably, the transaction may close in the coming months. Following the sale, Topgolf Callaway’s shareholders could see a potential revaluation of their stakes, depending on how the market perceives the separation and subsequent focus on individual business units.
Furthermore, this acquisition will likely require regulatory scrutiny to ensure compliance with antitrust laws, although specific details on regulatory approvals needed have not been disclosed. Overall, this potential transaction highlights a significant shift in strategy for Topgolf Callaway as it seeks to enhance shareholder value by streamlining its operations and focusing on profitable segments.