Callaway spins off Topgolf – Why investors are selling

The new company will be called Callaway Golf Company and the stock will have a new ticker.

Topgolf Callaway (NYSE: MODG) stock was plummeting on Wednesday, down about 9% after the company announced that it was selling off its Topgolf brand.

The news was not unexpected, as reports had surfaced last week that something was in the works.

On Tuesday, the reports were confirmed as the company announced that it was selling the Topgolf business to a private equity investor. The Callaway part would remain a public company, called Callaway Golf Company (NYSE: CALY), trading with a new ticker, CALY.

Topgolf, which owns a chain of high-tech driving ranges and the Toptracer ball tracking technology, was acquired by private equity firm Leonard Green & Partners (LGP) for $1.1 billion. LGP bought a 60% stake in the company, so Callaway would own a 40% stake.

Callaway expects to receive approximately $770 million in net proceeds once the deal is finalized in the first quarter of 2026.

“As we considered various alternatives to separate Topgolf, including a potential spin-off transaction, we received interest from a number of parties,” Chip Brewer, president and CEO of Topgolf Callaway Brands, said. “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.”

Why prompted the selloff?

Topgolf Callaway stock dropped about 9% on the announcement, as investors were likely disappointed in the deal for a couple of reasons.

One reason may have been the price. The companies merged in 2021 when Callaway acquired Topgolf in 2021 for about $2.7 billion. Some four years later, they are uncoupling, and Callaway only got $1.1 billion, far less than it paid.

It is only a 60% stake, so that explains some of the price differential, but still, investors may have been looking for more.

Also, there may be some dissatisfaction about maintaining a 40% stake in Topgolf, since the stated goals were to simplify the operating structure and sharpen the focus on Callaway. The deal certainly does that, but perhaps investors were hoping for a 100% spinoff of the Topgolf business.

“Importantly, this transaction supports our strategy of focusing on our leading Golf Equipment & Active Lifestyle platform. Post-transaction, our ongoing brand portfolio will consist of: Callaway, Odyssey, TravisMathew and Ogio,” Brewer said. “These businesses generated approximately $2 billion in revenue over the last twelve months through Q3 2025.”

Brewer said the business will be well-capitalized, enabling it to reinvest, pay down debt, and return of capital to shareholders.

What does Wall Street think?

Wall Street analysts were generally mixed on the deal. Texas Capital was disappointed in the valuation of the deal, as it had valued Topgolf at $2.2 billion, according to the Fly.

Analysts at Roth Capital were hoping for an outright sale of Topgolf, but they are still generally pleased with the deal and believe it will help Callaway drive earnings. They reiterated their buy rating and set a $14 per share price target. Topgolf Callaway is currently trading at $9.40 per share.

Analysts at Jefferies also liked the deal, saying the pure-play golf focus positions Callaway to capitalize on strong golf industry tailwinds, reported the Fly. Jefferies set buy rating with a $11 per share price target.