Pressure is growing from an activist shareholder for the diverse group – which includes golf equipment and home products as well as drinks – to be broken up.
Diageo revealed in August that it had free cash flow of £2 billion at its June 2010 year-end, which gives it good scope
to make acquisitions.
The Smirnoff and Johnnie Walker firm has long been linked with a possible bid for the drinks division of French-based multinational LVMH – which includes Moët Hennessy – but Fortune could
offer an attractive alternative.
Its brands include Jim Beam and Courvoisier, which would fill holes in Diageo’s global portfolio for big-name premium brands in Bourbon and Cognac.
Fortune also has Maker’s Mark Bourbon, Teacher’s blended Scotch whisky, Sauza tequila, Sourz, Harveys sherry, De Kuyper, Cruzan rum and Laphroaig Islay malt.
It is the world’s fourth biggest spirits producer after Diageo, Pernod Ricard and Bacardi.
Pernod and Bacardi are both likely rivals to Diageo for a Fortune spirits division bid, if the business comes on the market.
A deal based on a similar earnings multiple to previous major spirits sell-offs such as Allied Domecq and Seagram would value Fortune’s spirits business at around US$8 billion.
US analysts suggest the deal could be part-funded by a sell-off of a plethora of smaller brands within the Fortune portfolio.