Fortune’s plan could lead to Acushnet sale

Titleist balls on display during the 2010 PGA Merchandise Show.

Titleist balls on display during the 2010 PGA Merchandise Show.

Acushnet Co., which owns two of the most dominant brands in golf, Titleist and FootJoy, may be sold or spun-off as an independent publicly traded company.

That scenario could come to fruition as the board of Fortune Brands, parent of Acushnet, agreed in principle to split its company into as many as three separate entities. Fortune, with nearly $6.7 billion in sales in 2009, comprises three major businesses: liquor brands, home and security products, and its golf division.

Although speculation about an Acushnet sale has circulated periodically over the years, its reality crystallized quickly as signs of a recovering economy helped afford investors a chance to increase their share value.

The push to seize this opportunity surfaced when activist investor William A. Ackman revealed in October that his firm Pershing Square Capital Management had acquired an 11 percent stake in Fortune, making it the company’s biggest shareholder. But Fortune’s board already was “into the homestretch” of exploring a company breakup, according to The Wall Street Journal.

Ackman has maintained that Fortune’s entities could generate more value independently rather than if they were continued to be held collectively.

That argument was embraced in “constructive” fashion by Fortune’s board, which agreed Tuesday in principle to separate the company, WSJ reported. Fortune’s board has directed management to develop detailed separation plans for each business – including the structure, timing, and other related matters – within the next several months for consideration and final approval.

“The strength of the Acushnet Company as the undisputed global leader in the golf category, and confidence in our growth prospects, were factors contributing to the Board’s decision,” said Wally Uihlein, Acushnet’s CEO, in a statement released today. “Whether the Acushnet Company is sold to a new owner or becomes an independent publicly-traded company, our focus will be to keep on doing what’s made us the leader in our industry – the delivery of best-in-class products and service to our customers and golf consumers.”

Fortune acquired Acushnet in 1976, and Acushnet added FootJoy to its portfolio in 1985. The golf division reports annual sales of $1.2 billion. Acushnet’s brands, Titleist and FootJoy, dominate their respective product categories: In October, Titleist (and sister brand, Pinnacle) led the ball category with a combined 48.1 percent unit market share at on- and off-course golf retailers, according to industry research firm Golf Datatech. Similarly, FootJoy maintained its long-held leadership position in footwear with 55.1 percent unit market share.

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