Recently, Fortune Brands announced its plan to split into 3 companies. Keeping for itself the liquor business, which includes; Jim Beam, Canadian Club, and Makers Mark and brings in a cool $2.5 Billion a year.
They will be releasing Acushnet out into the world for companies and stock holders to fight over. Acushnet contains a few excellent Golf Brands including Titleist, Foot Joy, Scotty Cameron, and Pinnacle. They also used to pump out Cobra Golf Gear, but that was bought by Puma back in March.
So what does this mean for Titleist and FootJoy? Well they may get split up and taken over by someone completely different. Keeping them together could cause numerous foreseeable antitrust issues as explained by Terry McAndrew of GolfBiz.net:
“Potential strategic buyers linked in the past have included Callaway (ELY: NYSE), Nike (NKE: NYSE), Adidas, Bridgestone and Sumitomo Rubber. However, all of these potential suitors present significant antitrust issues. Adidas and Nike, for example, are #2 and #3 respectively in golf footwear and acquiring FootJoy in the #1 position would imply a major advantage to the successful buyer. Callaway and Bridgestone are #2 and #3 respectively in golf balls and acquiring Titleist and its dominate #1 position in market share would equally set off a series of complaints from those that lost out in a potential deal. Similarly Callaway, Bridgestone and Sumitomo represent golf ball product category intellectual property right antitrust issues.
An alignment between Titleist and anyone of those three would give the combined entity 40+% of the golf ball Intellectual Property Rights landscape. Navigating through antitrust issues would slow up any sale process and could require divestitures. Although there would be some financial synergies with any strategic buyer, the antitrust risks and delay coupled with the integration costs could outweigh those benefits along with the tax consequences that may influence the final sales price.”
So what do you think Rock Heads? Who is going to scoop up Titleist? Do you think the golf balls will still be as great? Do you think the Brands will still be as strong?