Adidas, Blackstone Said Among Bidders for Fortune’s Golf Unit
Sumitomo Rubber Industries Ltd. (5110), the owner of the Srixon golf ball line, also may submit a bid, said one of the people, who declined to be identified because the process is private. Offers are due May 9, and Fortune may negotiate with multiple parties in the coming weeks, another person said.
Fortune’s sporting-goods business, which makes the top- selling Titleist ball brand and FootJoy golf shoes, generated more than $1.2 billion in sales last year. Potential buyer Adidas yesterday posted a 26 percent sales gain in its golf unit, fueled by the success of the new TaylorMade R11 club.
’’Adidas is a more likely buyer than Nike or any other sporting-goods maker as it has the money and wants to grow its golf business,’’ said Peter Steiner, an amateur player and analyst at BHF Bank in Frankfurt. He has an “overweight” rating on Adidas.
Clarkson Hine, a spokesman for Deerfield, Illinois-based Fortune, declined to comment on the process, as did Adidas spokeswoman Katja Schreiber and Blackstone’s Peter Rose. The Financial Times reported the potential bidders earlier.
Fortune, led by Chief Executive Officer Bruce Carbonari, began planning to dismantle itself after activist William Ackman became the largest shareholder. Fortune intends to spin off its home and security division and focus on distilled spirits, such as Sauza tequila and Jim Beam bourbon. The home unit, whose products include Moen faucets and Master Lock padlocks, accounted for $3.23 billion in sales in 2010, compared with $2.67 billion for spirits.
The shares rose 33 cents to $63.83 at 3:54 p.m. in New York Stock Exchange composite trading. The shares had gained 5.4 percent this year before today.
Buying Fortune’s golf unit would allow Japan’s Sumitomo to expand its own sporting-goods business, which includes tennis balls and Srixon. The company also manufactures automobile and motorcycle tires and industrial rubber products. Calls to Sumitomo’s U.S. offices weren’t immediately returned.
Fortune is making “significant progress” on a spinoff of the home-products unit, to be called Fortune Brands Home & Security, Carbonari said on a conference call yesterday to discuss quarterly results.
The company said then that first-quarter profit, excluding items such as restructuring costs, rose to 59 cents a share, topping the 51-cent average of estimates compiled by Bloomberg. Total sales advanced 8.1 percent to $1.76 billion, led by growth in the spirits business.
Sum of Parts
Fortune has an enterprise value of $13.3 billion, which includes items such as debt. The sports-equipment business alone was worth $1.2 billion as of May 3, according to Doug Lane, an analyst with Jefferies & Co. in New York. The spirits business, anchored by its bourbon brands, could be worth $8.6 billion, while the home and security unit may be worth $3.9 billion, according to Lane.
Fortune’s history extends back to the 1864 founding of its predecessor by North Carolina farmer Washington Duke, according to Hoover’s Inc. The company expanded into home products in the 1980s and added seven liquor brands from Seagram in 1991. It has owned the Jim Beam distillery since the 1960s and exited tobacco in the 1990s.