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Fortune Brands is Breaking Up - Ackman Wins!

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Fortune Brands Inc (NYSE:FO - News) 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.




Today, Ackman won.


Fortune Brands confirmed this morning that it plans to break up the company, following the news from the Journal’s David Kesmodel.


He reported that Fortune Brands had considered a break up for the past four years as part of a strategic review of the company that owns Moen faucets, Jim Beam bourbon, Master Lock and Titleist golf equipment. Ackman and Fortune Brands had been cooperating on the possibly of separating the business into pieces.


(Sidebar: why does it takes four years to realize booze, golf, security equipment, bathroom fixtures and cabinetry do not work together in one company?)


Anyway, as shareholder activists tend to do, Ackman benefited financially just by disclosing his position in the company. He owns 16.7 million shares of Fortune Brands, which he has disclosed buying for a total price, including brokerage commissions, of $764,757,471 and 603,486 notional shares underlying swaps.


In pre-market trading, Fortune Brands are pointing up about 4.6% to $63.97. At Ackman’s rough per-share average purchase price of $45.88 for his Fortune Brands stake, the hedge fund manager has make a paper profit of about $302 million dollars.


If I committed that kind of capital I'd be an "activist" too!  ::)

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