US: Fortune Brands separates units, holds on to Beam Global

• Fortune Brands to spin off home and security, and golf products units
• Aiming to hold on to Beam Global Spirits & Wine
• Drinks industry alerted to possible US$2.5bn takeover tussle?

Fortune Brands has confirmed that it will break up its three business units and will look to become "focused solely" on its Beam Global Spirits & Wine division.

The company, which also operates home and security, and golf products divisions, confirmed today (8 December) that it will separate its three units, spin off the home and security business into a publicly-traded company, and sell or spin off its golf business. Fortune intends to keep Beam Global, in what it has termed "the next logical step in the evolution of Fortune Brands".

"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," said Fortune's chairman and CEO, Bruce Carbonari. "We believe now is the right time to move ahead with this tax-efficient approach, and we're confident the course we've outlined today generates greater potential long-term value than all other alternatives."

The announcement follows a review conducted by Fortune over the past four years, and comes after speculation last month suggested a break-up was imminent. Pershing Square Capital Management, fronted by Bill Ackman, upped its stake in Fortune to 11% in early-October, prompting a report in the New York Post claiming that Pershing and Fortune were in talks about the latter's future.

"Our board considered the interests of all of our shareholders," Carbonari continued, "including the views of our long-term shareholders and our largest current shareholder, Pershing Square Capital Management, with whom we found much strategic common ground."

"The board has directed management to develop detailed separation plans for consideration and final approval by the Board," Fortune said today. "The company expects to complete development of these plans - including the structure, timing, and other related matters for each business - within the next several months."

The break-up could make Beam Global a takeover target, with the likes of Diageo, Pernod Ricard and Bacardi thought to be interested in the division.

Beam Global, which owns Jim Beam and Maker's Mark Bourbon, Sauza Tequila and Courvoisier Cognac, is estimated to be worth around US$2.5bn, but it is thought unlikely that competition authorities would allow one big player to sweep up the whole portfolio.

To read the official announcement, click here.