Suntory Acquiring Beam For $16 Billion
Suntory Holdings is acquiring US-based spirits group Beam for a total consideration of approximately $16 billion, including the assumption of Beam’s outstanding net debt. The transaction consideration represents a 25% premium to Beam’s closing price of $66.97 on January 10, 2014; a 24% premium to the volume-weighted average share price over the last three months; and a multiple of more than 20 times Beam’s EBITDA for the 12-month period ended September 30, 2013.
The transaction, which has been unanimously approved by each company’s board of directors, is expected to close in the second quarter of 2014, subject to Beam stockholders’ approval, regulatory approvals and other customary closing conditions.
Employing 3,400 people, Beam generated 2012 sales of $2.5 billion (excluding excise taxes) and volume of 38 million 9-liter equivalent cases.
The transaction will create a stronger global player in premium spirits with annual net sales of spirits products exceeding $4.3 billion. Its combined portfolio of leading brands will include Beam’s Jim Beam, Maker’s Mark and Knob Creek bourbons, Teacher’s and Laphroaig Scotch whiskies, Canadian Club whisky, Courvoisier cognac, Sauza tequila, and Pinnacle vodka, and Suntory’s leading Japanese whiskies Yamazaki, Hakushu, Hibiki, and Kakubin, Bowmore Scotch whisky and Midori liqueur.
According to Euromonitor, Beam holds 1.4% of the global spirits market by volume and Suntory 0.6%. However, Beam controls 29.2% of the bourbon/other US whiskey category.
Beam’s president and chief executive Matt Shattock and the current Beam management team will continue to lead the business, which will be managed from Beam’s headquarters outside Chicago, Illinois.
Nobutada Saji, president and chairman of Suntory, says: “I believe this combination will create a spirits business with a product portfolio unmatched throughout the world and allow us to achieve further global growth. We are particularly excited about the prospect of working more closely with Beam’s excellent management and employees who will play an integral part in the growth of the business.”
“This is a very exciting development that delivers substantial value for our stockholders and creates an even stronger global company with an excellent platform for future growth,” says Matt Shattock. “Together we will be a global leader in distilled spirits with the number 3 position in premium spirits and a dynamic portfolio across key categories. With particular strength in Bourbon, Scotch, Canadian, Irish and Japanese whisky, the combined company will have unparalleled expertise and portfolio breadth in premium whisky, which is driving the fastest growth in Western spirits.”
“Our combined global routes to market will expand our joint distribution footprint, and the powerful innovation capabilities both companies have developed will be a significant advantage,” Matt Shattock continues.
On completion of the transaction, Suntory and Beam aim to achieve growth in markets worldwide, including the United States, the world’s largest spirits market, by leveraging a combined portfolio of strong brands, an expanded distribution network and fully sharing production and quality control know-how.
Suntory and Beam already have a successful business relationship under which Suntory distributes Beam products in Japan and Beam distributes Suntory’s products in Singapore and other Asian markets.
Founded in Osaka, Japan in 1899, Suntory Group is Japan’s leading player in alcoholic and non-alcoholic beverages, with sales of $17.6 billion (2012).
Suntory’s non-alcoholic beverage business is expanding successfully into international markets and was listed on the Tokyo Stock Exchange in 2013 as Suntory Beverage & Food. Suntory has supplemented its organic growth in overseas markets with strategic acquisitions including New Zealand beverage company Frucor Group and French beverage company Orangina Schweppes Group in 2009 as well as the acquisition of GlaxoSmithKline’s Lucozade and Ribena drink brands in 2013.
Suntory Group currently operates in Asia, Oceania, Europe, the Americas and Africa, with more than 28,000 employees (as of December 31, 2012).
