Business

Jim Beam, Titleist maker to split into three companies

Fortune Brands will keep its liquor business, including Jim Beam, but sell off some of its other brands that "have emerged from the economic downturn in such strong positions," CEO Bruce Carbonari said.
Fortune Brands will keep its liquor business, including Jim Beam, but sell off some of its other brands that "have emerged from the economic downturn in such strong positions," CEO Bruce Carbonari said. AP

NEW YORK — Consumer products maker Fortune Brands plans to split into three companies, keeping its liquor business led by Kentucky-based Jim Beam bourbon while shedding the units that make Titleist golf balls, Moen faucets and Master Locks.

Fortune Brands said Wednesday it will focus on its spirits business, which generates annual revenue of $2.5 billion and includes brands such as Canadian Club and Maker's Mark.

The home and security business, which also includes MasterBrand cabinets, will be spun off on a tax-free basis to shareholders. The golf business, which includes FootJoy golf shoes and gloves, will be either spun off or sold.

The announcement comes two months after activist investor William Ackman took an 11 percent stake in the company, becoming its largest shareholder.

Fortune Brands, based in Deerfield, Ill., said it expects to complete separation planning within several months. The separation is subject to conditions including regulatory approvals.

The company said the plan is the result of its ongoing strategic review over the past four years.

Fortune Brands was incorporated in 1985 but has its roots in the 19th century American Tobacco Co., which acquired a variety of businesses over the years. It had sold off its tobacco businesses by 1997.

"While the breadth and balance of our portfolio have served shareholders very well, we see the potential for even greater value by separating our businesses into focused companies at a time when they have emerged from the economic downturn in such strong positions," Chairman and CEO Bruce Carbonari said in a statement.

Analysts had long argued that the company could unlock the value of its businesses by turning them into separate entities. And Morgan Stanley analyst Dara Mohsenian said a split had been expected since Ackman took his stake.

Fortune had previously argued that the conglomerate format allowed it the financial flexibility to support the array of brands as business ebbed and flowed. However, all of the company's brands struggled in the downturn, leaving little benefit to having three units together that might fetch attractive bids on their own.

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