Holding your liquor

Fortune has come under pressure to restructure since October, when activist investor Bill Ackman revealed that his fund, Pershing Square Capital, had built an 11 percent stake.

The announcement that the US conglomerate will spin off its USD 3 billion home appliances business and its USD 1.2 billion golf business could prevent a potential boardroom battle with Mr Ackman.

The split also solves a tax issue for Fortune. It faced a huge tax bill if a buyer carved out the Jim Beam business from the group. The drinks business has been on the books for decades and has rocketed in value. However, a purchase of the business as a standalone entity would not incur such a charge.

The spin-off would be likely to take place in the second half of 2011, media reports say.

It seems most likely that there will be a joint offer for the drinks business from bidders, as happened in the case of drinks group Allied Domecq, which was taken over by Diageo and Pernod Ricard in 2004.

Diageo, Pernod Ricard and Bacardi are big and could face antitrust issues if they went solo.

Also, the companies’ own agreements with partners prohibit certain acquisitions: Diageo, for example, cannot own another cognac under the terms of its deal with Moët Hennessy.

Expect the analysts to come up with several scenarios in the coming weeks.