Fortune Brands has agreed to sell its golf business, which includes Titleist and FootJoy, to a group led by the owner of the Fila sports brand for $1.23 billion in cash, according to Reuters. The sale is the first big play toward the planned breakup of Fortune to become solely an alcoholic drinks company. The group of South Korean buyers is led by Fila Korea and Mirae Asset Private Equity, the largest private equity firm in South Korea.
Fortune expects net proceeds of $1.1 billion from the sale, which is on track for completion in the fourth quarter.
Also worth a note, Wally Uihlein will remain the CEO of Acushnet.
“We think the valuation of the business is fair, with the total purchase price implying about 1 times our 2011 estimated sales and just below 10.5 times our 2011 estimated EBITDA,” Jefferies analyst Douglas Lane said in a note.
Fila Korea saw off interest from private equity fund Blackstone Group , among others, for Acushnet which is Fortune’s smallest business and accounts for less than a fifth of its revenue.
The golf business will be a good fit with Fila given its portfolio in athletic footwear and apparel, analyst Lane said, adding that the “Korean consortium will be valuable to Acushnet’s strong Asia business, which continues to grow above domestic trends.”
Nearly half of the golf unit’s 2010 sales of $1.24 billion came in markets outside the United States. The unit had an operating income of about $80.2 million last year.
Reader Scott writes, “Suppose that Fila Korea is banking on some explosive growth in China, and that’s what made Titleist et al. worth more than the original estimates to them?” That’s a safe assumption. Finance experts, speak up!
(AP Photo/Mark Lennihan)