Sawtelle-based private equity firm Leonard Green & Partners in November agreed to acquire a majority stake in the Topgolf and Topracer business lines from Topgolf Callaway Brands Corp.
The deal will give Leonard Green a 60% stake in the recreational sporting brands and would value the brands at about $1.1 billion. The sale, in concert with additional financing transactions, would net Topgolf Callaway Brands about $770 million.
It was unanimously approved by Topgolf Callaway Brands’ board of directors and is expected in close in the first quarter of 2026.
“LGP is a leading private equity firm with a track record of success in investing in high-growth consumer companies and is an ideal partner for Topgolf in its next chapter,” Chip Brewer, president and chief executive of Topgolf Callaway Brands, in a statement. “I am proud of the Topgolf team and all the hard work that has gone into driving the business forward over the last five years. (This) announcement reflects the strength of the Topgolf business and its bright future, a future we continue to believe in and want to be part of. We look forward to partnering with LGP to further accelerate Topgolf’s growth and financial success.”
Adjusting businesses
The sale will advance Topgolf Callaway Brands’ endeavors to essentially undo the merger that first brought Topgolf under its umbrella.
Then Callaway Golf Co., a sports equipment manufacturer based in Carlsbad, acquired Topgolf for about $2 billion in 2020 and later rebranded to prominently feature the asset. Since that merger, the company has nearly doubled its Topgolf venues nationwide – including locations in El Segundo and Montebello – and by 2023, had made the brand free cash flow positive.
However, investors did not remain impressed with the pairing and disparate operating strategies between the manufacturing wing and the recreational side of the companies.
Eroding share prices had eaten about two-thirds of the company’s market capitalization by 2024, and its board announced a plan to spinoff Topgolf as a new publicly traded company.
“As we considered various alternatives to separate Topgolf, including a potential spin-off transaction, we received interest from a number of parties,” Brewer added. “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. This transaction is highly attractive in that it provides the company with both significant proceeds and substantial upside in the continued growth of Topgolf.”
Once the transaction closes, Topgolf Callaway Brands will revert to the Callaway Golf Co. name. It will continue to be the equipment supplier for Topgolf.
Leonard Green, under the tenure of managing partner Jonathan Sokoloff, has grown to about $75 billion in assets under management and includes restaurant chain Shake Shack and retailer The Container Store in its investments.
The firm presently holds a nearly 5% stake in Topgolf Callaway Brands, valued at about $106.3 million.
