FBI Fortune Brands

    


Fortune Brands Inc



Fortune Brands, Inc. (NYSE: FO):

    --  Companies Agree to Accelerate Termination of ABSOLUT Distribution Joint
        Venture in U.S.

    --  Fortune Brands Receives $230 Million in Cash and Pays $100 Million for
        Fastest Growing Rum Brand in U.S.

    --  Beam Global Spirits Unit to Transition to Dedicated Sales Force in U.S.,
        Simplifying Route to Market and Enhancing Marketplace Focus

Fortune Brands (NYSE: FO) and Pernod Ricard today announced an agreement under
which Fortune Brands will receive compensation in exchange for early termination
of the company's distribution agreement with Pernod Ricard's ABSOLUT vodka and
other brands.

Under the agreement, Pernod Ricard will pay Fortune Brands $230 million in
pre-tax proceeds, and Fortune Brands will pay $100 million to Pernod to acquire
the premium Cruzan Rum brand. The agreement will result in the termination as of
October 1st of the U.S. distribution agreement between Fortune Brands' Beam
Global Spirits & Wine business and the U.S. business of V&S Group recently
acquired by Pernod. The joint distribution agreement had been scheduled to
remain in place through February of 2012.

"This is a win-win agreement that provides significant benefits to Fortune
Brands," said Bruce Carbonari, president and chief executive officer of Fortune
Brands. "In exchange for accelerating the end of our U.S. distribution agreement
with ABSOLUT, we'll receive a cash payment of $230 million. We're also pleased
that we'll acquire a fast-growing premium rum brand. Rum is one of the most
attractive spirits categories, and the addition of Cruzan fills a portfolio gap
in premium rum with the category's fastest growing brand in the U.S." Cruzan
will join 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.

                 Greater Control Over U.S. Spirits Distribution

"Importantly, by transitioning to a dedicated sales force focused solely on our
brands, we'll simplify our route to market in the U.S. and enjoy greater control
over our distribution," Carbonari added. "Our seven-year partnership with
ABSOLUT served its purpose, but our spirits business is a much bigger company
today with the scale and leading positions in key spirits categories to fully
leverage the strengths of a dedicated sales force."

"We believe moving forward now with this distribution solution will provide
valuable clarity and sharper focus to our sales force, and will better support
Beam Global's vision of 'building brands people want to talk about,'" said Tom
Flocco, president and chief executive officer of Beam Global Spirits & Wine. 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.

                         Financial Impact of Transaction

"This transaction serves shareholders significantly better than allowing the
distribution partnership to expire in 2012," Carbonari said. "The termination
payment from Pernod more than compensates for our higher costs of distribution
over the remaining term of the joint venture agreement. From a strategic
perspective, we'll also benefit from a dedicated U.S. sales force. And we see
significant upside potential over the long term from the Cruzan Rum brand."

The company estimates it will recognize a net gain amounting to $1.18 per
diluted share (approximately $180 million after tax) in its third quarter
results, reflecting the cash payment from Pernod Ricard plus the remaining
unamortized gain from V&S's initial investment in the joint venture, as well as
modest restructuring charges to realign the sales organization.

This benefit will be partly offset by both the elimination of cost synergies and
investments to build a state-of-the-art dedicated sales organization.
Specifically, the company expects results to be impacted by: higher pre-tax
operating costs going forward amounting to approximately $12 million in the
fourth quarter and a total of approximately $35 million in 2009; and, as
required by accounting rules, elimination of the noncash pre-tax deferred gain
recognition of V&S's initial investment in the joint venture, which will no
longer be amortized as Other Income ($7 million in the fourth quarter and $27
million total in 2009). The company expects the addition of Cruzan to be
earnings neutral in year one, reflecting continued investment to build the
brand.

                          Strong Growth for Cruzan Rum

Cruzan is the fifth largest rum brand in the U.S. and generated worldwide net
sales of approximately $50 million in 2007 on volume of approximately 750,000
cases. Cruzan's depletions - sales from distributors to retailers - grew at a
strong double-digit rate last year in the U.S., the brand's largest market.
Founded in 1760 on the Caribbean island of St. Croix, Cruzan offers a full-line
of light, dark and flavored rum. Because Cruzan is already distributed in the
U.S. by the Beam Global-Absolut joint venture, the company anticipates a smooth
integration of the brand into its portfolio. The acquisition includes the Cruzan
distillery on St. Croix, as well as inventory.

Fortune Brands has discussed the acquisition of Cruzan with Virgin Islands
Governor John P. deJongh, Jr., who welcomed the pending sale as an important
milestone in the Territory's continuing strategy to build the rum industry. "We
welcome Fortune Brands and Beam Global to the U.S. Virgin Islands," Governor
deJongh said. "We look forward to working with them in the years ahead to grow
the Cruzan Rum brand, and to continue to explore new and cooperative ways for
the government to assist in the development of the rum industry in the
Territory." Fortune Brands believes the Virgin Islands Government's efforts on
behalf of the rum industry contribute to the favorable prospects for the future
growth of Cruzan Rum.

The acquisition of Cruzan is subject to customary regulatory approvals and is
expected to close within the next month.

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, 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(TM) Patent
Index.

To receive company news releases by e-mail, please visit www.fortunebrands.com.

Forward-Looking Statements

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.

Fortune Brands, Inc.
Media Relations:
Clarkson Hine
(847) 484-4415
or
Investor Relations:
Tony Diaz
(847) 484-4410

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