Fortune Brands to split Jim Beam from Moen and Titleist
In an unexpected announcement today, Fortune Brands has said it will split its four main businesses apart. Fortune Brands is the parent company of three very different companies. Fortune Brands plans to keep the liquor business, while spinning off or selling Moen facets, its home security business and Titleist golf.
Structure of Fortune Brands
Fortune Brands is a unique business on the New York Stock Exchange. The company owns a liquor business; Jim Beam bourbon is its biggest seller. Titleist golf is also owned by Fortune Brands. Moen faucets, a high-quality fixture company also falls under the Fortune Brands umbrella. Fortune Brands also has a home-security business. Though conglomerate companies are not unusual on the stock market, these four business entities do not have much overlap. This lack of overlap makes managing Fortune Brands difficult, though all the elements of Fortune Brands are profitable.
Pressure on Fortune Brands
Fortune Brands has reportedly been considering splitting off its companies for several years. Earlier this year, William Ackman, of Pershing Square Capital Management, purchased an 11 percent stake in Fortune Brands. Ackman has been encouraging Fortune Brands to split off its businesses. “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,” said Chief Executive Bruce Carbonari in a statement.
The fate of the pieces of Fortune Brands
The details of the breakup of Fortune Brands have not yet been finalized. What is known for sure is that the home security unit of Fortune Brands will be spin off into its own company in a tax-free transaction for shareholders. The golf business will be either sold or spun off, depending on the payday loans no faxing financing availble to a buyer and what is most beneficial to both Fortune Brands and the shareholders of the company.