News broke last week that Topgolf Callaway is selling off its German sportswear company, Jack Wolfskin.

File that newsflash under the heading, “Surprise/Not Surprise.”

The deal is not surprising for a couple of reasons but it is surprising given both the buyer and the current global political climate.

Let’s dive into the details.

Surprise buyer, sort of

Topgolf Callaway is selling Jack Wolfskin to Chinese apparel and footwear giant ANTA Sports in a straight cash deal for a reported US$290 million. The sale is expected to be finalized by late June or early July.

ANTA is the world’s third-largest sporting goods manufacturer behind NIKE and adidas. It’s a major player in basketball with NBA stars Kyrie Irving, Klay Thompson and the recently retired Gordon Hayward under contract.

ANTA was founded in 1991. In 2018, it was part of a consortium that purchased a controlling interest in Amer Sports, the Finnish sporting goods giant that owns, among others, Wilson Sporting Goods.

Given the uncertainty of the current climate surrounding tariffs, the purchase is, on the one hand, surprising. However, given Jack Wolfskin’s relatively small footprint in the U.S. and its growing business in China, it’s a deal that makes sense for ANTA.

Why it’s not a surprise

This one’s simple. Since COVID, Jack Wolfskin has been more or less a drag on Topgolf Callaway’s business. It’s been cited as an underperforming business unit in nearly every Topgolf Callaway quarterly financial report since 2020.

“This sale will allow us to increase our focus and optimize our resources on our core business,” said Topgolf Callaway CEO Chip Brewer in a prepared statement. “The proceeds will further enhance our balance sheet and liquidity, reinforcing our financial flexibility ahead of our planned separation of Topgolf from our core operations.”

In other words, Topgolf Callaway is dumping a dog.

Jack Wolfskin has been a loser for Topgolf Callaway since Callaway purchased the company in 2018 for $476 million. At the time, Callaway was looking to actively “equipment proof” its business by diversifying its Active Lifestyle division. A year earlier, Callaway had acquired OGIO and TravisMathew.

Jack Wolfskin’s European business has been on the downswing for several quarters and the company has been taking steps to “right-size” its operations. In the last two quarterly reports, however, Topgolf Callaway has stated that Jack Wolfskin’s business in China has been growing.

That makes the ANTA purchase a bit more understandable.

Roth Capital analyst George Kelly said the sale price was greater than Topgolf Callaway anticipated. Additionally, Kelly says Jack Wolfskin was always a poor fit for the company, and its poor performance had been a constant distraction. Several Wall Street analysts are now giving Topgolf Callaway a “Buy” rating.

Topgolf Callaway stock has gone up over 10 percent since news of the sale came out last week.

What it means

Given Jack Wolfskin’s limited North American business, it means very little to consumers in the U.S.

For ANTA, the company gains an asset at what has to be considered a bargain price. Topgolf Callaway has spent considerable time and resources right-sizing the Jack Wolfskin operations. That means ANTA is also getting a leaner (read: lower overhead) operation with a growing footprint in the Chinese market.

For Topgolf Callaway, there are 290 million reasons why this is a good move. The company can certainly use the cash to help grease the skids on the upcoming split. It’s also an obvious fire sale of an underperforming brand. Topgolf Callaway is selling Jack Wolfskin for $186 million less than it paid for the company just seven years ago.

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