Topgolf Callaway Brands Sells Majority Stake to Leonard Green & Partners
Leonard Green to acquire a 60% interest in Topgolf with Topgolf Callaway Brands retaining a 40% stake
Topgolf Callaway Brands to receive ~$770 million in net proceeds
Topgolf Callaway Brands Corp. (the "Company" or "Topgolf Callaway Brands," "we," "our," "us"), announced a significant strategic move by signing a definitive agreement for the sale of a 60% stake in its Topgolf and Toptracer businesses to Leonard Green & Partners, L.P., a prominent private equity firm. This transaction values Topgolf at approximately $1.1 billion and is expected to provide Topgolf Callaway Brands with around $770 million in net proceeds, subject to some adjustments.
Chip Brewer, President and CEO of Topgolf Callaway Brands, shared insights on this decision. He commented, "In considering alternatives for separating Topgolf, we received interest from various parties. After extensive discussions and evaluations, we concluded that partnering with Leonard Green is the optimal solution for our shareholders, employees, and all stakeholders involved. This deal presents considerable financial benefits and significant growth potential for Topgolf."
Brewer emphasized LGP's exceptional reputation in the investment industry, stating, "Their track record in high-growth consumer sectors makes them an ideal partner as Topgolf embarks on a new journey. I am immensely proud of our team and their efforts to elevate the Topgolf brand over the years. Today's announcement showcases our confidence in the future of Topgolf and our desire to contribute to its ongoing success. We are eager to work together with LGP to bolster Topgolf's growth and financial achievements."
The new agreement aligns with Topgolf Callaway Brands' overarching strategy, focusing on its Golf Equipment and Active Lifestyle platform. Following this sale, the company's brand portfolio will feature Callaway, Odyssey, TravisMathew, and Ogio, having generated approximately $2 billion in revenue over the past year. With this transaction, Topgolf Callaway Brands will be well-positioned to continue reinvesting in its core businesses, reduce debt, and provide a substantial return to shareholders through stock buybacks or similar strategies.
This significant decision has received unanimous approval from the Board of Directors, with expectations for the deal to close in the first quarter of the following year. The agreement depends on regulatory approvals and standard closing conditions, including the review periods mandated by the Hart-Scott-Rodino Antitrust Improvements Act, but no financing contingency is present as LGP has secured the required funding.
Upon closing, the Company plans to undergo a rebranding, changing its name to Callaway Golf Company along with an update to its ticker symbol, which will become CALY. Its common stock will remain listed on the New York Stock Exchange.
Topgolf Callaway Brands has enlisted Goldman Sachs & Co. LLC and Centerview Partners as financial advisors, while Latham & Watkins LLP serves as the legal advisor for this transformative deal. Leonard Green is also supported by Moelis & Company LLC as its financial advisor and additional counsel from Ropes & Gray LLP and Sidley Austin LLP.
Topgolf Callaway Brands will hold a conference call to discuss this landmark agreement, allowing stakeholders to gain further insights into the transaction. This call is scheduled for the designated morning, aiming to engage investors and the public, enabling them to understand the strategic implications of this partnership. A replay will be accessible shortly after the call concludes.
Frequently Asked Questions
What does this transaction mean for Topgolf Callaway Brands?
This transaction provides Topgolf Callaway Brands with substantial financial proceeds while retaining a significant stake in the Topgolf business, ensuring continued involvement in its growth.
Who is Leonard Green & Partners?
Leonard Green & Partners is a prominent private equity firm known for investing in high-growth companies across various sectors, making them a strong partner for Topgolf.
What changes are anticipated after the transaction is completed?
Post-transaction, Topgolf Callaway Brands will change its name to Callaway Golf Company and update its ticker symbol to CALY, enhancing brand focus.
Will Topgolf continue its operations as usual?
Yes, Topgolf will continue to operate and expand under the leadership of Leonard Green, allowing the company to pursue new growth strategies and improve financial performance.
How will this sale impact shareholders?
This transaction is expected to benefit shareholders by providing a meaningful return of capital through initiatives like stock repurchases, in addition to enhancing the company's financial positioning for future growth.
