Fortune Brands to break up into 3 companies
After years of speculation, Fortune Brands Inc. has decided to break up the widely diverse company, adding to the roster of Chicago area companies that will shrink considerably.
The Deerfield based purveyor of golf equipment, bourbon and faucets is planning to divide itself into three. Fortune will keep its liquor business, while shedding its home and security unit, which makes Master Lock locks and Moen faucets, and its golf unit, which includes the Titleist and FootJoy brands.
When the new liquor focused Fortune emerges, it will join Sara Lee as a slimmer company. The Downers Grove based food making giant has been fending off takeover speculation as it completes the sale of several of its business units to focus on meat and coffee.
When deals in the offing close, neither company will resemble the hulking conglomerates of old, and many experts maintain that both will be more vulnerable to takeovers, hostile or otherwise.
Also looking to focus its business, Motorola Inc. will split into two companies in early January, the Schaumburg based technology company announced in November. Two publicly traded companies will emerge from the separation: Motorola Solutions, which will consist of the division that makes communications gear for public safety, government and enterprise customers; and Motorola Mobility Holdings, which will comprise mobile devices and television set top boxes. In the split, Motorola Mobility will be spun off, with Motorola Inc. then changing its name to Motorola Solutions.
“What we’re seeing is the end of 1:1 replica handbags an era,” said Marc de Swaan Arons, chairman of marketing consultancy EffectiveBrands. “But more interesting, perhaps aaa replica designer handbags , is fake louis bag to understand why.”
He said that it has become increasingly important for a company to have a clear identity or purpose to help better appeal to consumers.
James Schrager, a professor at the University of Chicago Booth School of Business, said that while it was trendy for companies to acquire disparate businesses in the 1970s, most were divesting by the late 1980s.
“It’s a classic smart move,” Schrager said of Fortune’s split. “There’s a very simple corporate strategy: Focus equals power.”
He cited Wal Mart Stores Inc. as being the best example of a large but tightly focused company that has enjoyed enormous success. He added that General Electric Co.
However, de Swaan Arons Fake Louis Vuitton Replica Bags said, there needs to be a logical connection between a company’s various holdings, citing LVMH Moet Hennessy Louis Vuitton’s portfolio of luxury brands. Trying to connect whiskey and golf balls is challenging, he said.
“There needs to be a basic logic around the businesses, and if you can’t find it, it probably means it isn’t there,” he said.
Fortune’s decision to split came just weeks after the disclosure that activist investor William Ackman fake louis bag , of Pershing Square Capital Management, had acquired an 11 percent stake in the company.
“I know it’s been on their radar for a while,” said Philip Gorham, an analyst with Morningstar, adding that the possibility of a Fortune breakup had been brought up at investor meetings for years. He said Ackman’s disclosure “likely triggered” the breakup announcement, and that the timing makes it likely that Fortune and Ackman had been working “in collaboration.”
The result of the breakup will be two publicly traded companies in Deerfield, consisting of its home and security business, and the flagship spirits division as the new Fortune Brands. Fortune will either spin off or sell its golf unit, which is based in Fairhaven, Mass.
Company spokesman Clarkson Hine added that Fortune has no plans to move or cut any of the 450 Chicago area jobs. Fortune has 25,000 employees worldwide.
Most industry analysts expect replica louis vuitton Fortune’s liquor unit to draw a lot of interest once it has shed itself of the golf and home divisions.
“I don’t think this is high quality designer replica handbags wholesale end of the story,” Gorham said. “I’m sure the drinks business is going to (be sold) as well.”
Not only is liquor a high margin business that historically has done well, but Fortune boasts a bevy of popular brands, including Maker’s Mark and Sauza.
Gorham estimated that the golf business has a market value of about $900 million, and said either Nike high quality replica handbags china or Adidas could be likely buyers. He thinks the home unit is probably worth about $4.5 billion.
Establishing a valuation for the spirits business “gets a lot more interesting,” Gorham said, because there are a number of possible buyers, including London based Diageo and Paris based Pernod Ricard.
“More than one party will be interested,” Gorham said. “And if that’s the case Perfect Quality Louis Vuitton Replica , we might see a bidding war ensue where the price gets forced higher and higher.”
He estimated that the spirits business could be worth about $7.8 billion, which is 13 times the division’s earnings before interest, taxes, depreciation and amortization. However, he noted replica louis vuitton bags from china that Pernod paid 22 times EBITDA when it acquired the parent of Absolut Vodka in replica louis vuitton handbags 2008.
Sara Lee met with renewed attention Wednesday afternoon after the company’s stock price briefly topped $16 for the first time in almost three years. Nearly 10,000 calls to buy the stock changed hands, six times the number of puts to sell, according to Bloomberg News. Sara Lee reportedly attracted interest from Apollo Global Management LLC and KKR Co. earlier this year.
Sara Lee spokesman Mike Cummins declined to comment on speculation regarding a fake designer bags possible sale. Earlier this week, the company announced that the sale of global body care and European detergent businesses to Unilever had closed. Last month, Sara Lee said that it would cheap louis vuitton bags from china sell its North American bakery business to Grupo Bimbo.
Fortune has been divesting businesses for more than a decade. Originally known as American Brands, Fortune owned Lucky Strike and Pall Mall cigarettes and Jergens lotion when it was incorporated in Perfect Quality Louis Vuitton Replica 1985. The company sold its tobacco interests in 1994 and changed its name to Fortune in 1997.
The company spun off an office supplies division, which included Swingline staplers and Day Timer calendars, as Acco World Corp. in 2005. The same year, Fortune acquired wine and spirits brands, including Maker’s Mark, Sauza and Clos du Bois.
Fortune established its headquarters in Deerfield in 2006 and sold its wine business in 2007. More recently, the company acquired additional liquor brands, including Cruzan rum and Effen vodka.