The stock price of Topgolf Callaway has seen a significant decline, dropping from a high of $36.92 per share in May 2021 to $10.76 at the time of the announcement.

The proposed spinoff will involve Topgolf being spun off with at least 80.1 percent ownership to qualify for tax-free treatment under U.S. federal income tax.

Post-separation, Callaway is expected to retain a stake of up to 19.9% in Topgolf, reflecting its long-standing investment in the brand.

Topgolf Callaway reported second-quarter revenue of $494 million, with year-to-date revenue surpassing $917 million, largely due to the opening of new venues.

The separation is projected to be tax-free for shareholders and is expected to be finalized in the second half of 2025.

In March 2021, Callaway Golf Co. completed its acquisition of Topgolf Entertainment Group for approximately $2 billion, resulting in the formation of Topgolf Callaway Brands Corp.

Following the merger, Topgolf Callaway Brands Corp. has announced plans to separate its two primary businesses, Topgolf and Callaway, into independent entities.

CEO Chip Brewer expressed disappointment regarding the company's stock performance and recent sales figures, while highlighting Topgolf's growth potential.

The separation aims to create distinct companies with focused business models, which is expected to enhance shareholder value and position both brands for success.

As part of the transition, Topgolf may slow the opening of new venues to mid-single digits in 2025 to ensure financial stability.

Chip Brewer emphasized that the differing operating models and investment needs of Topgolf and Callaway justify the decision to split.

The announcement of the separation led to a roughly 5% rise in Topgolf Callaway shares in premarket trading.