Beam, one of the biggest names in US whiskey and parent of Cooley Distillery, is to be acquired by Suntory Holdings in a deal valued at $16 billion, including debt, that underscores the Japanese drinks group's acquisitive global ambitions and Asia's growing thirst for premium spirits.
The takeover is the biggest in the drinks industry since French group Pernod Ricard’s €5.6 billion acquisition in 2008 of Vin and Sprit, the Swedish owner of Absolut vodka.
The deal, unanimously approved by both companies’ boards, will close in the second quarter of the year, subject to shareholder approval.
The two sides said the combined group would result in “a stronger global player in premium spirits with annual net sales of spirits products exceeding $4.3 billion”.
Suntory, Japan’s biggest drinks group by sales, is to pay $83.50 a share – a 25 per cent premium to Beam’s closing price on Friday of $66.97. Shares in Beam jumped more than 24 per cent in early Wall Street trading yesterday to $83.27.
Trevor Stirling, an analyst at Bernstein Research, described the price as "punchy" – a multiple of 20 times Beam's earnings before interest, tax, depreciation and amortisation for the year to the end of September 2013.
Pernod paid a similar multiple for Absolut – 20.8 times – and was widely regarded as having overpaid, though the acquisition boosted the French company’s presence in the US.
Mr Stirling said: “There were significant costs synergies for Pernod in the Vin & Sprit deal, but there are very few cost synergies in this deal because there is little overlap. If there is an upside for Suntory, it will be in revenue synergies.”
Beam is the world’s fifth largest spirits group by sales, and its takeover will put the combined group in third position, behind the UK’s Diageo and Pernod.
Beam acquired Louth distillery Cooley, controlled by the family of John Teeling, in late 2011 in a deal worth $95 million. Beam is the third large acquisition in recent years for Suntory. It bought soft drinks brands Lucozade and Ribena for £1.35 billion from GlaxoSmithKline last year and acquired France's Orangina Schweppes in 2009.
– Copyright The Financial Times Limited 2014