Fortune Brands To Break Up; Who Buys Titleist?

As suggested in rumors several weeks ago, Fortune Brands, the parent company of Acushnet/Titleist will break up, selling off the golf division.

Here in part is the Reuters report:

(Reuters) – Fortune Brands Inc (FO.N) plans to split the company into three parts, giving investors pure plays in golf, home products and alcoholic drinks.

The announcement comes two months after activist investor William Ackman took an 11 percent stake in the company, whose brands like Jim Beam bourbon, Titleist golf balls and Moen faucets have little strategic overlap.

Under a plan approved by the board, Fortune will spin off its home and security unit to shareholders in a tax-free transaction, and either sell or spin off its golf unit, the company said on Wednesday.

Fortune would remain a publicly traded maker of spirits, with brands including Sauza tequila and Maker’s Mark bourbon.

Fortune Brands always has been a bit of a Frankenstein monster, owning a variety of seemingly disconnected lines such as Titleist, Jim Beam, Makers Mark, Moen Faucets, and Masterlock. Fortune Brands is descended from tobacco giant American Tobacco, which was chartered in 1890. Following a Supreme Court ordered break up in 1911, American Tobacco diversified into a variety of alcohol, office (Acco) and home wares products. It changed its name to American Brands in 1969, and became Fortune Brands in 1997. Brown and Williamson acquired the tobacco division in 1994.

Acushnet (Titleist) began as a rubber processing company in 1910. In 1932, it expanded its line to golf balls. Fortune Brands acquired the company in 1976. Fortune bought Foot-Joy in 1985 and Cobra Golf in 1996.

I’m not sure how this will make Fortune Brands stronger, but it surely is designed to make Ackman wealthier.

An interesting question is who would buy Acushnet/Titleist. It’s possible you’d see some interest from Callaway, TaylorMade or Nike just to get the patents and the Titleist brand. That makes the most sense. It also would be possible that a second tier company, like Bridgestone could make a play. I can’t imagine that Adams has the resources.

But lets think for a minute outside the box. How about Under Armor? They’ve made a big play into the golf market in recent years, with clothing and accessories. This would be a ready-made ball and club addition and make them an immediate force.

Or how about a retailer? Dick’s? Sports Authority? GolfSmith? Food for thought.

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