NEW YORK—Fortune Brands Inc., the company that makes a variety of consumer products including liquor, golf products, and home furnishings, announced on Wednesday that it would split into three companies.
Fortune makes alcohol under the brands Jim Beam and Maker’s Mark; golf balls, supplies, and apparel under the brand Titleist; as well as faucets under the brand Moen. The company said on Wednesday that it would separate its golf and home- products businesses into two separate companies.
Under pressure from its shareholders, who argue that the company would be more valuable—and profitable—as separate businesses focused on manufacturing and marketing one line of products, Fortune said that it would spin off its home business to shareholders in a tax-free transaction.
Its golf business would be either spun off to shareholders or sold to a new buyer. The deals would consummate over the next three months, the company indicated.
“We are taking the next logical step in the evolution of Fortune Brands, which we believe will maximize long-term value for our shareholders and create exciting opportunities within our businesses,” said Bruce Carbonari, Fortune CEO, in a statement.
“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.”
It is believed that one major shareholder, hedge fund Pershing Square Capital Management, reportedly increased pressure on the board to increase shareholder value.
Bill Ackman, hedge fund manager at Pershing Square, was quoted in the Wall Street Journal as calling the split “phenomenal news.”
Shares of Fortune Brands (NYSE: FO) increased by 1 percent on Wednesday.
Fortune makes alcohol under the brands Jim Beam and Maker’s Mark; golf balls, supplies, and apparel under the brand Titleist; as well as faucets under the brand Moen. The company said on Wednesday that it would separate its golf and home- products businesses into two separate companies.
Under pressure from its shareholders, who argue that the company would be more valuable—and profitable—as separate businesses focused on manufacturing and marketing one line of products, Fortune said that it would spin off its home business to shareholders in a tax-free transaction.
Its golf business would be either spun off to shareholders or sold to a new buyer. The deals would consummate over the next three months, the company indicated.
“We are taking the next logical step in the evolution of Fortune Brands, which we believe will maximize long-term value for our shareholders and create exciting opportunities within our businesses,” said Bruce Carbonari, Fortune CEO, in a statement.
“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.”
It is believed that one major shareholder, hedge fund Pershing Square Capital Management, reportedly increased pressure on the board to increase shareholder value.
Bill Ackman, hedge fund manager at Pershing Square, was quoted in the Wall Street Journal as calling the split “phenomenal news.”
Shares of Fortune Brands (NYSE: FO) increased by 1 percent on Wednesday.
