UPDATE 3-Fortune Brands to sell Titleist golf business to S.Korea's Fila

* Deal for $1.23 bln

* Fortune shares down 1 pct (Adds details on golf business in para 7, updates shares)

By Mihir Dalal and Denny Thomas

HONG KONG/BANGALORE, May 20 Fortune Brands Inc agreed to sell its golf equipment business for $1.23 billion, to a group led by South Korean sports apparel and footwear maker Fila Korea Ltd, as part of Fortune's goal to become a pure-play alcoholic drinks company.

Late last year, the maker of Jim Beam bourbon announced plans to sell or spin off its Acushnet golf unit, which makes Titleist golf balls and FootJoy gloves and shoes, and spin off its home products business, which makes Moen faucets, amid pressure from activist investor William Ackman. [ID:nN07107821].

Fortune, which said its business separation plan was on track for completion in the fourth quarter, expects net proceeds of about $1.1 billion from the sale.

"We think the valuation of the business is fair, with the total purchase price implying about 1 times our 2011 estimated sales and just below 10.5 times our 2011 estimated EBITDA," Jefferies analyst Douglas Lane said in a note.

Fila Korea saw off interest from private equity fund Blackstone Group , among others, for Acushnet which is Fortune's smallest business and accounts for less than a fifth of its revenue.

The golf business will be a good fit with Fila given its portfolio in athletic footwear and apparel, analyst Lane said, adding that the "Korean consortium will be valuable to Acushnet's strong Asia business, which continues to grow above domestic trends."

Nearly half of the golf unit's 2010 sales of $1.24 billion came in markets outside the United States. The unit had an operating income of about $80.2 million last year.

The Fila-led group includes Mirae Asset Private Equity, National Pension Service of Korea and Korea Development Bank.

Fila Korea acquired the global Fila brand in 2007 from Sports Brands International, a unit of hedge fund Cerberus Capital Management. The deal gave Fila Korea rights to the worldwide use of footwear and apparel brands of the parent firm, established in Italy in 1911.

Morgan Stanley and Centerview Partners advised Fortune on the deal and Nomura Holdings and KDB advised Fila.

Fortune's shares were down 1 percent at $64.18 on Friday on the New York Stock Exchange. (Reporting by Denny Thomas in HONG KONG and Mihir Dalal in BANGALORE, additional reporting by Stephen Aldred and Nivedita Bhattacharjee; Editing by Dan Lalor and Sriraj Kalluvila)