Jim Beam Gets Out Of The Faucets And Golf Balls Business.

[cowdery]

Fortune Brands, owner of Jim Beam, Maker's Mark, Knob Creek, Booker's, Baker's, Basil Hayden's, Old Grand-Dad, and Old Crow, announced today that it is getting out of all non-beverage businesses. It will spin-off its home and security products businesses (Moen faucets, MasterCraft cabinets, Master Lock security products, etc.) as a new, independent company, and either sell or spin-off its golf products businesses (Titleist golf balls, etc.).

This has been approved by the board in principle but they still have to figure out exactly how they're going to do it, so the actual deed is months away, at least.

Since Beam Global is Fortune's only distilled spirits business, one of those names probably will go away and it probably won't be Fortune.

More here.

[jmpyle]

Kind of sad that the Beam Global name will likely dissapear.

[ethangsmith]

To me, this seems like good news. Now Fortune should be able to focus solely on their liquor and spirits. I wonder what changes, if any, will occur with Beam.

[White Dog]

To me, this means nothing. Basil Hayden will still be an 80proof. Yawn.

[OscarV]

To me this says that the people that are in the bourbon business have a very optimistic view for the future of bourbon.
So much so they said let's ditch all the other stuff, bourbon is all we need.

[p_elliott]

Or they think the economy is in the shitter and those other enterprises will go broke and everyone will just become a bunch of helpless drunks.

[dean_martin]

"Insiders suggest Diageo could be interested in cherry-picking Fortune's bourbons, including Maker's Mark, to expand its bourbon presence in the US. But the UK based company is unlikely to be able to bid for the whole liquor business because of competition issues that take into account distribution agreements with LVMH Moet Hennessy on cognac and with Casa Cuervo for Jose Cuervo tequila.

Because of that, rivals such as Pernod Ricard or Davide Campari-Milano would have to be interested in joining an auction for the remaining assets."

From The Telegraph (UK) but there was mention of this in the business section of my local paper this morning. It appears that the break-up arises from William Ackman described as an "activist investor" who has built up an 11% stake. He reportedly stands to make a $260 million profit (as a result of the break-up, I'm assuming, but it's not clear).

[Josh]

Competitive issues never stopped Diageo before...

But seriously, I'm glad they're getting rid of their balls. It's about time.

[cowdery]

Plainly, the Telegraph didn't read the news release. The spirits business isn't for sale, nor is the home and security business. The golf business might be.

Ackerman, as the largest shareholder, could reject the actual separation plan once it's submitted but nothing is pointing to that. This appears to be exactly what he wanted Fortune to do. Regardless, it takes Fortune out of play for the time being.

The question of Diageo wanting to get back into the American whiskey business is a completely separate matter, albeit an interesting one. Their timing getting out of that business was as bad as it could possibly have been so I imagine they'll be very careful getting back in. They've been tinkering at the margins but nothing serious.

[rocky480]

Whether it's spin or not, I have no idea, but Fortune's Board claimed that they already were working on plans to break up the company.

It's not surprising to see one of the last of the conglomerates being broken up in this day and age. The unfortunate thing is the uncertain future that I think the Beam bourbon business faces as all indications both here and overseas are that Diageo will figure out a way to buy the new Fortune Brands, or at least the Beam bourbon business. While I'm sure there will always be JBW, I wonder what Diageo will do with the OGD lines and whether the recent movements towards producing more unique products like the Knob Creek SB will be continued?