Japan’s Suntory Limited purchases Jim Beam for $16 billion

Suntory-Beam merger spirits

Suntory-Beam merger spirits

The agreement to a $13.6 billion cash purchase of Jim Beam by Japanese beverage giant Suntory Holdings Limited represents the first big corporate acquisition of 2014 and is also a sign of the growing popularity of whiskey, particularly Kentucky Bourbon’s whiskey, both overseas and domestically. The acquisition will help the Asiatic conglomerate expand its global growth, according to Suntory President and Chairman Nobutada Saji. Beam President and CEO Matt Shattock and the Deerfield, Illinois company’s current management will continue to run the U.S. based corporation. Both firm’s boards approved unanimously the transaction, which is intended to close in the second quarter.

The numbers

The Japanese firm will pay $83.50 per share, a 25 percent premium to Beam’s closing price of $66.97 on the Friday previous to the announcement. The total cash-and-debt value of the purchase of Beam by Suntory is roughly $16 billion. Suntory plans to finance the deal with available cash and fully committed funding from the Bank of Tokyo-Mitsubishi UFJ. This merger will put another American beverage firm into foreign hands. Of the 10 most important and largest international spirits firms, just Kentucky’s Brown-Forman Corp, which owns Southern Comfort and Jack Daniel’s, will continue to be domestically headquartered.

The Jim Beam-Suntory merger represents the largest deal that the Japanese firm has ever closed, which will elevate it to the third largest maker of distilled drinks worldwide. The merged company is expected to have annual sales of more than $4.3 billion. According to analysts, this would give Suntory 11 percent of the spirits market share in the United States, up from less than 1 percent.

The big picture

The purchase of Jim Beam by Suntory is considered to be the third largest acquisition of an overseas business by a Japanese conglomerate. The only two larger deals of this kind were SoftBank’s acquisition of U.S. Sprint Nextel and Japan Tobacco’s purchase of Britain’s Gallaher, the company behind Benson & Hedges cigarettes. The Jim Beam-Suntory merger gives the Asiatic investor ownership of brands such as Jim Beam, Ardmore, Teacher’s and Laphroaig Scotch, Maker’s Mark Kentucky Bourbon’s whiskey, Sauza tequila, and Courvoisier cognac. Beam also owns Old Grand-Dad, Baker’s, Old Crow, Booker’s, Basil Hayden’s, Knob Creek bourbons, Starbucks-branded liqueurs, and several Irish whiskey brands.

Kentucky Bourbon’s whiskey popularity has blossomed in recent years, especially in Asian markets like Japan. The Kentucky Distillers Association calls the Jim Beam-Suntory merger overwhelming news and evidence that the bourbon renaissance is stronger than ever.

 

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