MAIL STOP
March 21, 2006
Mark A. Roche, Esq.
Senior Vice President, General Counsel and Secretary
Fortune Brands, Inc.
520 Lake Cook Road
Deerfield, Illinois 60015
RE: Fortune Brands, Inc.
Registration Statement on Form S-4
File No. 333- 131990
Filed February 24, 2006
Dear Mr. Roche:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. We note that 67% of the Class A and 33% of the Class B
stockholders have signed agreements to vote in favor of the
merger.
We also note that Fortune Brands has the right to acquire voting
control of SBR through the option agreement with these same
stockholders. Please tell us how these agreements comply with the
position in Section VIII.A.9 of the Current Issues Outline dated
November 14, 2000 that is available on our website.
2. Please note that we may have comments on the tax and legality
opinions and any related prospectus disclosure once those exhibits
are filed. Please allow adequate time for our review before
requesting effectiveness of the registration statement.
Letter to SBR, Inc. Stockholders and Notice of Meeting of
Stockholders
3. Because the letter to SBR`s shareholder also serves as
soliciting
materials, please strive for a balance presentation. Where you
include the board`s recommendation to approve the merger, please
disclose, if true, that board members will directly benefit from
the
merger. Please make similar revisions in all applicable places in
the registration statement.
4. Because the Class A and Class B shares will be voting
separately,
please delete the reference that 72% of the outstanding capital
stock
has agreed to vote for the merger.
5. Please revise to state simply that Fortune Brands will acquire
SBR, Inc. through a merger.
Questions and Answers About the Merger, page iii
6. Please consolidate repetitive disclosure in the Q&A and Summary
sections. Some of the responses to questions in this section are
repeated or elaborated upon in the Summary. You should view the
Q&A
and the Summary as a single section and organize them accordingly.
Q: What is the merger consideration? page iii
7. Please disclose the values of the adjustments in the bulleted
list
as of the most recent practicable date.
Summary, page 1
8. The summary term sheet should begin on the first or second page
of
the proxy statement. Please move this section so that it appears
before the question and answer section.
9. Disclose the anticipated time period between the vote of
shareholders and the closing of the transaction.
Risk Factors, page 7
10. Please avoid language in risk factors like "adversely affect."
Instead, please revise your risk factors to state what the
specific
impact will be on your financial condition or results of
operations.
11. The subheadings of the following risk factors merely state
facts
and do not adequately reflect the risks that follow. Please revise
your subheadings to succinctly state the risks you discuss in the
text. We refer you to:
* We operate in a highly competitive market
* We sell products internationally and are exposed to currency
exchange rate risks
12. Some of your risk factor discussions are boilerplate and could
apply to any issuer or to any offering. If you elect to retain
these
and other general risk factors in your prospectus, you must
clearly
explain how they apply to your industry, company, or offering.
For
instance, since all companies rely on their key personnel, clearly
explain how this specific risk applies to your company. For
example,
are any of the key people planning to retire or nearing retirement
age or do you lack employment contracts with these individuals?
Additionally, please refer to the risk factor entitled "Our
financial
results and demand for our products are dependent on the
successful
development of new products and processes." Please revise as
appropriate.
13. In order to enhance the current relevancy of the risks
described,
please disclose whether, and the extent to which, you have been
impacted by any of the risks discussed in the following risk
factors:
* "Our spirits and wine business relies on the performance of
wholesale distributors...";
* "Increased excise taxes on distilled spirits and wine could
adversely affect our spirits and wine business";
* "Changes in golf equipment regulatory standards could adversely
affect our golf business"; and
* "Potential liabilities and costs from litigation could adversely
affect our business."
Shares Entitled to Vote, Quorum and Vote Required, page 13
14. Please explain the meaning of a broker non-vote.
Solicitation of Proxies; Expenses, page 14
15. We note that you may employ various methods of soliciting
proxies. Please note that all written soliciting materials,
including emails or scripts to be used in soliciting proxies over
the
telephone, must be filed under cover of Schedule 14A. Please
refer
supplementally confirm your understanding.
Interests of Certain Persons in the Merger, page 15
16. Please quantify the amounts to be paid to executive officers
as a
result of the transaction.
Related Merger Agreements, page 15
17. Please identify the person who exercises voting and investment
control of the shares owned by SB Ross and Tres.
Woodcraft Disposition, page 16
18. Please disclose the basis for the board of directors`
determination that the price to be paid for the Woodcraft entities
represents fair market value.
Background of the Merger, page 19
19. Please disclose whether SBR considered any other strategic
transactions and/or business combinations with any other company.
If
so, disclose what these were and why they were disregarded.
20. Please disclose whether Fortune Brands or SBR, Inc. initiated
contact regarding a proposed transaction.
21. We note that Chief Executive Officers of Fortune Brands and
SBR
became acquainted over the past five years due to their positions
in
the U.S. home products business. Please describe your past
business
relationship in greater detail. Please refer to Item 6 of Form S-
4.
22. This section should include information about the negotiation
of
the principal terms of the agreement, including transaction
structure
and price. Please disclose the proposed valuation discussed at
the
December 2005 meeting between members of the two companies`
management teams and subsequent negotiations related to the price
to
be paid.
23. With respect to each of the factors listed for recommending
the
merger by both Fortune and SBR, please provide a reasonably
detailed
discussion and clearly elaborate on the conclusions drawn by the
board as to the benefits or detriments of each factor.
24. Please disclose whether there were any negative factors
considered by the boards of Fortune and SBR. For instance, please
disclose whether the fact that any portion of the merger
consideration paid in cash would be taxable to holders was
considered
as a risk of the transaction.
SBR`s Reasons for the Merger; Recommendation of Board of
Directors,
page 19
25. We note that the SBR board concluded that combining with
Fortune
Brands will create a stronger and more focused company that will
provide significant benefits to SBR`s shareholders, employees and
customers alike. Please elaborate on this strategic rationale and
the economic and operational benefits of the merger.
Regulatory Clearances and Approvals, page 21
26. Please update the status of the regulatory approvals sought or
to
be sought from the anti-trust authorities.
The Merger Agreement, page 22
27. Pursuant to Item 601(b)(2) of Regulation S-K please file a
list
briefly identifying the contents of all omitted schedules or
similar
supplements. In addition, please file an agreement to furnish the
staff with a copy of any omitted schedule upon request. The
agreement to furnish the staff with copies of omitted schedules
may
be included in the exhibit index to the registration statement.
28. We note your statement that the representations and warranties
were made to and solely for the benefit of the parties and that
SBR
stockholders should not rely on the representations and warranties
as
characterizations of the actual state of facts. Please revise the
disclosure to remove any potential implication that the referenced
merger agreement does not constitute public disclosure under the
federal securities laws.
29. We note the statement that "information concerning the subject
matter of the representations and warranties may change after the
date of the merger agreement." Please be advised that,
notwithstanding the inclusion of a general disclaimer, you are
responsible for considering whether additional specific
disclosures
of material information regarding material contract provisions are
required to make the statements included in the proxy
statement/prospectus not misleading.
Merger Consideration, page 23
30. We note the statement on page 20 that the merger consideration
resulted from negotiations which "considered the historical
earnings
and dividends of Fortune Brands and SBR; the potential growth in
SBR`s market and earnings, both as an independent entity and as a
part of a larger organization such as Fortune Brands, SBR`s asset
quality; and the effect of the merger on the shareholders,
employees
and customers of SBR." Please clarify who determined the amount
of
consideration to be paid and how that amount was determined. For
instance, state whether a specific amount was purposed by one of
the
parties to the transaction and elaborate on the factors listed
above.
Conditions to the Consummation of Merger, page 32
31. Briefly describe the facts under which you may waive the
conditions to the merger, and any circumstances under which you
would
re-solicit shareholders` votes.
Comparison of Stockholder Rights, page 45
32. We note that the information you provide in this section is
qualified in its entirety. Because you are responsible for the
accuracy of the information in the filing, and because Rule 411(a)
permits qualification of information in the prospectus by
reference
to information outside of the prospectus only in limited
circumstances, this qualification is inappropriate. Please remove
it.
Stock Purchase Plan, page 61
33. Please quantify the amount of stock and the purchase price of
stock that was sold under the stock purchase plan in 2005.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment decision. Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
? should the Commission or the staff, acting pursuant to
delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
? the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
? the company may not assert staff comments and the declaration
of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
Please contact Craig Slivka at (202) 555-3729 or Chris
Edwards,
Special Counsel, at (202) 551-3742 with any questions.
Sincerely,
Pamela A. Long
Assistant Director
cc: Gregory J. Bynan, Esq.
Winston & Strawn, LLP
(312) 558-5700
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Mark A. Roche, Esq.
Fortune Brands, Inc.
Page 1 of 7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE