Well the ladies and gentlemen of Fortune Brands, parent company of MasterBrand Cabinets, have a big idea.
Fortune Brands announced today it will be splitting into three businesses, selling or spinning off its home and golf units. Fortune will continue on as pure-play spirits company. This is a tax-free spinoff, meaning that shareholders will receive stock in the new spin-offs as well.
Home furnishings is $3B in revenues ($3B) with spirits in the #2 position ($2.5B), but spirits have proven to be more resilient in the rough market. I guess when times are tough, we consumers still protect our budget for alcohol.
Earlier this year in April, Fortune sold its Cobra golf brand to Puma. Earlier this week, Fortune announced the spinoff of Acushnet, one of the world’s largest golf companies.
What does this mean for MasterBrand Cabinets?
As Fortune puts it, it’s a “tax-efficient approach” for its investors which will “generates greater potential long-term value.” I’m not sure what that over-used term actually means these days, because it sounds to me like “dump and run.” For all of you wondering how to improve your personal balance sheet, you also have a “tax-efficient approach” – just get rid of your kids. Think of it this way: with the “greater potential long-term value” you generate for yourself, you can easily move your entire cabinet operation to the web.
MasterBrand will most likely become an independent entity, or part of a home furnishings independent entity. It might get sold one day, or it might not. At $3B in revenue, it certainly isn’t going away.
One thing is for sure though, once the spin-off is completed, home furnishings will stop skewing the numbers of alcohol, making Fortune look bad to the investors.
Do you think a cabinet industry “mega-merger” (i.e. Masco + MasterBrand = MascoBrand Cabinets) is on the horizon?