A FORTUNE WINDFALL FOR DIAGEO?
The breakup of Fortune Brands is shaping up to be a potential boon for Diageo. The drinks company is the most probable buyer of most of Fortune Brands’ Jim Beam spirits business, with Bacardi Ltd. as a bidding partner for the remainder, Liberum Capital analysts reported. “We expect Diageo to buy as much as 7O percent of the Beam Global Spirits business,” paying 3.5 billion pounds ($5.7 billion) to 4 billion pounds, Liberum’s Pablo Zuanic and Lisa Hau stated. Diageo would need a partner as it couldn’t buy Fortune’s cognac and tequila businesses because of agreements with other spirits makers. Diageo’s focus is to make purchases in markets where growth is the fastest. Fortune Brands initially planned to split into three separate businesses and focus on distilled spirits after activist investor William Ackman built up a stake, the company said in December. The plan includes the continuation of “Fortune Brands as an independent public company focused solely on our Beam Global distilled spirits business,” Clarkson Hine, a spokesman for Fortune Brands, said. Since then, Liberum said, news reports have indicated Fortune may seek to sell the spirits business. Diageo also announced in February that it had agreed to acquire Mey Icki in a transaction that values Turkey’s largest maker of Raki, an aniseed-flavored spirit, at 3.3 billion Turkish lira ($2.1 billion). Bacardi would be the most likely co-bidder on Fortune spirits with Diageo because of its size compared with other potential buyers, including Davide Campari-Milano SpA, according to the analysts.