Fortune Set for Home Biz Spin-Off - Analyst Blog
26 August 2011 - 5:15PM
Zacks
The leading consumer brands company Fortune Brands
Inc. (FO) announced that its board of directors has given
the final nod to proceed with the split of the company’s Home &
Security business effective October 3, 2011, at business close.
Post spin-off, the Fortune Brands Home & Security business is
proposed to be traded under the symbol ‘FBHS’ while the spirit
business will be rechristened Beam Inc. and will replace the
current “FO” symbol with the eponymous “BEAM”.
Before the final spin-off, Home & Security will pay a cash
dividend of $500 million to Fortune Brands. Additionally, Fortune
Brands will allocate all the shares of Fortune Brands Home &
Security to its shareholders in the form of a cash dividend. The
shareholders of Fortune Brand will be credited with one share of
Fortune Brand Home & Security for each share of Fortune Brand
they hold.
The company cited that the two businesses are well poised to
create long-term value for shareholders with their competitive,
financial and organizational strength capable of securing
better-than-market growth.
Fortune Brands had earlier announced its intention to split the
company into three standalone units, giving investors pure plays in
golf, home products and alcoholic drinks. reholders in a tax-free
transaction. The ensuing spin-off of the Home & Security
business, in a tax-free transaction, is integral to this original
plan. The radical separation has been the outcome of four years of
strategic evaluation conducted by Fortune’s board and
management.
Fortune Brands is the largest spirits company in the U.S. and
the fourth largest in the world. The company faces intense
competition from well-established players in the market such as
Diageo plc (DEO) and Brown-Forman
Corporation (BF.B) in its spirits business and
Masco Corporation (MAS) in its home and hardware
business.
Currently, Fortune Brands has a Zacks #3 Rank, implying a
short-term Hold rating on the stock. We hold a long-term Neutral
recommendation on the stock.
BROWN FORMAN B (BF.B): Free Stock Analysis Report
DIAGEO PLC-ADR (DEO): Free Stock Analysis Report
FORTUNE BRANDS (FO): Free Stock Analysis Report
MASCO (MAS): Free Stock Analysis Report
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