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Topgolf Callaway (NYSE: MODG) stock was on the move Friday, rising some 6% to make it one of the day’s top gainers.

The catalyst for the golf stock was the news that it was exploring the sale of its Topgolf unit, according to a report from the Wall Street Journal.

The Journal, citing people familiar with the matter, said the company was in talks to sell Topgolf to private equity firm Leonard Green, which owns a minority stake in the company. The business is reportedly valued at about $1 billion, according to the report.

Topgolf is a high-tech driving range where customers can also enjoy food and drinks. There are roughly 100 Topgolf facilities around the country.

In 2021, Topgolf merged with Callaway, the golf club and equipment manufacturer, in a deal valued at roughly $2.7 billion.

It has not exactly been a winning combination though, as the stock price has dropped some 64% since the merger was finalized. It is now trading at just $11 per share.

No separation anxiety

Investors reacted positively to the news, as the separation is seen as a way to maximize shareholder value by enhancing the strategic focus, optimizing capital investment, and simplifying the operating structure of each brand.

It also comes as no surprise, as the firm announced plans to separate the businesses into two separate companies last year.

“While the Company expects that a spin-off of Topgolf into a stand-alone public company is the most likely separation path, the Company will continue to evaluate other options for separation to maximize shareholder value,” officials said in a releasee announcing the plans last September.

If Topgolf was acquired by Leonard Green it would obviously not be a public company, but a private entity. The report said the company was in talks with Leonard Green so it in no way means that a deal is imminent or even likely – it could fall through.

But, based on the plans announced last year, it is likely that the company will split in some form or fashion.

Topgolf Callaway stock is up about 43% year-to-date, likely in anticipation of a deal happening. The company had indicated last year that the spinoff would happen in the second half of 2025.

On the third quarter earnings call, company CEO Chip Brewer said the firm remains committed to the separation, but gave no update on timing, only to say the timing was impacted by the CEO transition at Topgolf. Artie Starrs, the CEO of the Topgolf unit, left the company in September and the search for a replacement is underway.

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