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