Deerfield, Illinois, September 30, 2008 - Fortune Brands, Inc. (NYSE: FO) today completed the previously announced transactions with Pernod Ricard to accelerate the end of the U.S spirits distribution joint venture with Pernod's V&S Group brands and to also acquire the Cruzan Rum brand.
As a result, Fortune Brands has received $230 million in pre-tax proceeds from Pernod Ricard to end the U.S. distribution agreement effective October 1, 2008. As of that date, the company's Beam Global spirits unit will integrate the joint venture sales force into its own operations, simplifying its route to market in the U.S. and providing greater control over its own sales and distribution in its largest market.
Additionally, Fortune Brands has completed acquisition of the Cruzan Rum brand from Pernod Ricard for $100 million, giving the company an excellent position in the attractive premium rum segment.
"These transactions serve our shareholders very well and enable our spirits business to pursue accelerated growth with clarity, confidence and a simpler sales structure in our largest market," said Bruce Carbonari, chairman-elect and chief executive officer of Fortune Brands. "As the payment from Pernod more than offsets the loss of the remaining cost synergies from the joint venture, we're being well compensated. At the same time, we see significant benefits to owning and developing a high-performance spirits sales force in the U.S. that will be sharply focused solely on our own brands. We're also excited to enhance our portfolio with the Cruzan Rum brand, which establishes a growing position for us in the attractive premium 16:51 9/30/2008 rum category."
With strong double-digit growth in 2007, Cruzan is the fastest growing rum brand in the U.S. Because Cruzan is already sold in the U.S. by the joint venture sales force being transitioned into Beam Global, the company anticipates a smooth integration of the brand into its portfolio. Cruzan joins the company's portfolio of premium global brands that includes Jim Beam and Maker's Mark bourbons, Sauza tequila, Canadian Club whisky, Courvoisier cognac and Laphroaig single malt Scotch. Cruzan had worldwide net sales of approximately $50 million in 2007 on volume of approximately 750,000 cases. The acquisition includes the Cruzan distillery on St. Croix, as well as inventory.
The company's Beam Global spirits business is the fourth largest premium spirits business in the world, and its case volume going forward will be the second largest in the U.S.
About Fortune Brands
Fortune Brands, Inc. is a leading consumer brands company with annual sales exceeding $8 billion. Its operating companies have premier brands and leading market positions in distilled spirits, home and hardware, and golf products. Beam Global Spirits & Wine, Inc. is the company's premium spirits business. Major spirits brands include Jim Beam and Maker's Mark bourbon, Sauza tequila, Canadian Club whisky, Courvoisier cognac, Cruzan rum, Teacher's and Laphroaig Scotch, and DeKuyper cordials. Home and hardware brands include Moen faucets, Aristokraft, Omega, Diamond and Kitchen Craft cabinetry, Therma-Tru door systems, Simonton windows, Master Lock padlocks and Waterloo tool storage sold by units of Fortune Brands Home & Hardware LLC. Acushnet Company's golf brands include Titleist, Cobra and FootJoy. Fortune Brands, headquartered in Deerfield, Illinois, is traded on the New York Stock Exchange under the ticker symbol FO and is included in the S&P 500 Index, the MSCI World Index and the Ocean Tomo 300™ Patent Index.
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This press release contains statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned that these forward-looking statements speak only as of the date hereof, and the company does not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date of this release. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to: competitive market pressures (including pricing pressures); consolidation of trade customers; successful development of new products and processes; ability to secure and maintain rights to intellectual property; risks pertaining to strategic acquisitions and joint ventures, including the potential financial effects and performance of such acquisitions or joint ventures, and integration of acquisitions and the related confirmation or remediation of internal controls over financial reporting; changes related to the privatization of V&S Group; ability to attract and retain qualified personnel; general economic conditions, including the U.S. housing market; weather; risks associated with doing business outside the United States, including currency exchange rate risks; interest rate fluctuations; commodity and energy price volatility; costs of certain employee and retiree benefits and returns on pension assets; dependence on performance of distributors and other marketing arrangements; the impact of excise tax increases on distilled spirits; changes in golf equipment regulatory standards and other regulatory developments; potential liabilities, costs and uncertainties of litigation; impairment in the carrying value of goodwill or other acquired intangibles; historical consolidated financial statements that may not be indicative of future conditions and results due to the recent portfolio realignment; any possible downgrades of the company's credit ratings; as well as other risks and uncertainties detailed from time to time in the company's Securities and Exchange Commission filings.