Fortune Brands Inc. to Sell Golf Division, Possibly Fetching $1.5 Billion

As part of its strategic breakup, Fortune Brands Inc. has selected Morgan Stanley to oversee the sale of its golf division, which is expected to fetch as much as $1.5 billion. The potential buyers include major sports brands, private-equity firms, and Asian companies, according to sources close to the matter. This sale is part of Fortune's plan to split into three separate businesses, following a stake acquisition by activist investor William Ackman. Meanwhile, Allstate Corp. has filed a lawsuit against Bank of America Corp. and its Countrywide mortgage unit over $700 million in residential mortgage-backed securities. The insurance company claims that Countrywide misrepresented the investments, resulting in significant losses. Additionally, the Alexian Brothers Hospital Network is set to break ground on a new children's hospital in Hoffman Estates, funded entirely by private sources and charitable donations.

Key Takeaways:

• Fortune Brands Inc. plans to sell its golf division, which generates annual earnings of approximately $120 million, through an auction that may fetch up to $1.5 billion.
• The sale will be overseen by Morgan Stanley, which may approach potential strategic acquirers such as Nike Inc. and Adidas AG, in addition to private-equity firms and Asian companies.
• Fortune will spin off its home and security division and sell or spin off the golf unit, which makes Titleist golf balls, following a plan announced last month.
• The Alexian Brothers Hospital Network is breaking ground on a new children's hospital in Hoffman Estates, funded by private sources and charitable donations, with an estimated completion date of 2013.
• Allstate Corp. has filed a lawsuit against Bank of America Corp. and its Countrywide mortgage unit over $700 million in residential mortgage-backed securities, claiming that Countrywide misrepresented the investments.

Statistics:

• $120 million: annual earnings from the golf division
• $1 billion to $1.5 billion: potential sale price of the golf division
• 10 times to 11 times earnings: possible multiplier for the golf division sale
• $700 million: amount of residential mortgage-backed securities in question in the Allstate lawsuit
• 2013: estimated completion date for the new children's hospital

Sources:

• Bloomberg News, citing four people with knowledge of the matter
• Fortune Brands Inc., announcing its plan to split into three separate businesses
• Allstate Corp.'s complaint filed in federal court in Manhattan
• Alexian Brothers Hospital Network, announcing its new children's hospital project