Buyout shops are expected to be all over the Fortune Brands Inc. break-up, according to two senior bankers.
Firms that have had Fortune Brands on their radars for some time include
The Deerfield, Ill.-based company announced Dec. 8 that it plans to continue as a pure-play, publicly traded spirits business, while spinning off its home and security business to become an independent, publicly traded company; and selling or spinning off its golf business. The company made the move after pressure from hedge fund investor William Ackman.
As a whole, Fortune has a market capitalization of $9.3 billion across three disparate business lines with little overlap. Its spirits business, with $2.5 billion in annual revenue, includes Jim Beam and Maker’s Mark-brand bourbons as well as name-brand whiskeys, rums and tequilas. Its home and security business, with annual sales exceeding $3 billion, is the home of Moen-brand faucets, MasterBrand Cabinets and Master Lock padlocks, among other products; and Acushnet Company, its golf business, which has annual sales of $1.2 billion, is led by Titleist, the golf ball maker, and FootJoy, which makes golf shoes and gloves.
Lincoln International’s Asia team has already started assembling ideas for buyout shops on the expansion of the golf business there, where the sport’s market and popularity have been growing, said Rob Brown, a co-founder of the Chicago-based investment bank. “Golf, as a whole, is a saturated market in the U.S. and Europe, but in Asia it’s a growth market,” he said. “Every private equity group would love to say they have the Titleist brand in their portfolio.”
Brown added that buyout shops would find the home and security business attractive in part because it’s a good time to bet on a rebound in housing and building products. Fortune’s spirits business is likely to solicit bids from larger strategics such as Diageo, Brown and others have said in recent media reports.
It’s not clear if any of the buyout shops mentioned above have maneuvered to get ahead of the spin-out process, which should take months. Carlyle Group and TPG, through spokespeople, declined to comment. The other firms did not respond to requests for comment.
The head of financial sponsors said any firms interested will be trying to position themselves accordingly. “If I were an LBO guy, I would position myself as someone who knew management for if and when they decide to go public.”
An analysis of the company’s executives shows several connections with private equity.
Bruce Carbonari, the company’s chairman and CEO, was an executive at Stanadyne Inc., then the owner of Moen, in 1988 when
Christopher Klein, president and COO of the home and security business, worked at Bank One Corp. starting in 2001, the same year it created
Matthew Shattock, the CEO of the spirits business, and Wally Uihlein, CEO of the golf business, do not appear to have any discernable past relationships with private equity.