Fortune Brands to go by the name of Beam Inc after separation
Conglomerates, daaahlings, are so yesterday’s fashion. Which is what Fortune Brands found out to its detriment when the activist investor Bill Ackman told the board that the aggregate value locked up in its three divisions (golf/home products/drinks) was higher than the company’s total.
He may be right: after all, bourbon, shower heads and golf clubs are not exactly synergistic businesses.
Fortune’s board, ever so obedient, immediately responded by announcing in December last year that it would split the company into three.
Investors were updated on the progress on 26 April 2011 when Fortune provided the additional information that following the separation of its golf and home products businesses, expected to take place in the second half of the year, the alcoholic drinks company will rename itself Beam Inc. It’s now Beam Global Spirits & Wine. The name change reflects Beam’s focus on spirits, rather than on wine. The company owns a number of premium spirits brands, including Jim Beam, Sauza and Courvoisier.
The company is currently considering a sale or a spin-off (i.e. an independent stock-market listing) of its golf business, including the Titleist and FootJoy brands, as Acushnet Co.
It has already been decided that the company’s home division, including Master Lock, MasterBrand and Moen faucets, will keep the parent company’s name, as Fortune Brands Home & Security once it is spun off.
In the 12 months ended 31 December 2010, Fortune Brands had a turnover of USD 7.1 billion (EUR 4.8 billion) or 6.7 percent over 2009. EBITDA stood at USD 1.0 million, while EBIT was USD 812 million.
The spirits division had a turnover of USD 2.7 billion (EUR 1.8 billion), or less than 40 percent of the group’s total, yet it contributed over 70 percent to the group’s total EBITDA.
Fortune is the number four drinks group in the world after Diageo, Pernod Ricard and privately-owned Bacardi and the number two in the U.S. after Diageo.
If we assume that the going rate in the drinks industry is 12 times EBITDA, Beam Inc could be worth over USD 12 billion (EUR 8.1 billion).
