Fortune Brands Inc. (FO), whose products range from Moen faucets to Titleist golf balls and Jim Beam bourbon, on Wednesday said it will spin off its office products unit and merge it with General Binding Corp. (GBND) to focus on its main businesses.

General Binding shares soared 38 percent, while Fortune stock gained 1.8 percent in early trading Wednesday.

The new company will combine Fortune's Acco World Corp. (search) products like Swingline staplers and Day-Timer planners with General Binding's shredders, laminating equipment and Quartet presentation boards.

"This is a business Fortune Brands has done a great job of turning around and has never been a great strategic fit for the company," said Eric Bosshard, an analyst at FTN Midwest Securities. "This transaction makes a great deal of strategic sense for Fortune Brands."

Fortune said it will now try to sharpen its focus on the home & hardware, spirits and wine and golf businesses.

"This is something that I think shareholders have looked forward to and ... that makes a lot of sense," Bosshard said.

After the simultaneous spin-off and merger is completed this summer, shareholders in Fortune and General Binding will receive shares of the new company, Fortune said.

Fortune will also receive a cash dividend of $625 million from ACCO as part of the deal.

Under terms of the merger, Fortune shareholders will get one share of the new company, Acco Brands Corp., for every 4.6 Fortune shares.

General Binding holders will receive one new share for each General Binding share.

Fortune shareholders will own 66 percent of the new company and General Binding stockholders will own 34 percent.

Fortune said the combination of the $625 million dividend and shares in the new company imply a total value to Fortune shareholders of around $1.1 billion before the benefit of any future synergies.

"The combined company will benefit from significant operating synergies," said David Campbell, president and chief executive of ACCO, who will lead the new company as chairman and CEO.

He said annual cost savings should reach $40 million over the next three years, he added.

Acco's long-term goals include sales growth in the low- to mid-single-digits in percentage terms, mid- to high-single-digit gains in operating income and double-digit growth in diluted earnings per share, the Fortune statement said. It did not specify a time frame.

"We considered a range of alternatives for ACCO, and we believe this spin-off and merger maximize value for shareholders," Fortune Brands Chairman and CEO Norm Wesley said.

The two businesses had $1.9 billion in revenues and $190 million in operating income in 2004, Fortune said.

General Binding stock jumped $5.03 to $18.11 on Nasdaq, while Fortune rose $1.44 to $82.74 on the New York Stock Exchange, nearing its 52-week high of $85.18.