Topgolf Callaway Soars on Report It’s Exploring Sale, Spinoff
(Bloomberg) -- Topgolf Callaway Brands Corp. jumped the most since May 2022 following a report that the company is exploring a sale of its equipment-making arm.
Most Read from Bloomberg
Trump Rules Out Vivek Ramaswamy as Running Mate as He Eyes New TeamWhat Happens If Trump Can’t Post His $454 Million BondUltra-Wealthy Are Souring on Chicago’s Most Elite NeighborhoodApple Is in Talks to Let Google Gemini Power iPhone AI FeaturesUS Weighs Sanctioning Huawei’s Secretive Chinese Chip Network
Shares climbed as much as 12% Wednesday after the Chosun Daily reported that the Callaway Golf business would be valued at nearly $3 billion in a potential deal, citing sources in the investment banking industry. Topgolf Callaway’s major shareholders will spin off Topgolf, the chain of high-tech driving ranges, and sell only Callaway, the news outlet said.
The report comes as the golf industry struggles to hold onto a pandemic boom in the sport. The uncertainty has done little to deter some investors. Centroid Investment Partners — which owns TaylorMade, the company Tiger Woods is partnering with for an apparel line — said in February it was raising a $500 million fund for a new acquisition.
Read more: Golf-Loving Investor Behind Tiger Woods Deal Seeks More M&A
Callaway’s major shareholders have selected a lead manager and are in the process of selling their stakes and management rights, according to the South Korean news outlet. Topgolf Callaway didn’t respond to a request for comment from Bloomberg News.
In March 2021, Callaway Golf Co. closed a deal to buy the remainder of Topgolf Entertainment Group it didn’t already own in a deal that valued the driving range chain at about $2 billion.
“A separation of the two businesses could make strategic sense, as they appear to offer little in the way of synergies,” Raymond James analyst Joseph Altobello wrote in a note to clients Wednesday. Still, only about three years since the original Topgolf acquisition, it may be “a little early to throw in the towel,” he added.