Suntory Holdings to Acquire Beam in $16 Billion Transaction
Date: Jan 13, 2014
Source: Suntory Holdings Limited
- Beam Stockholders to Receive $83.50 Per Share in Cash
- Agreement Represents a Premium of 25% Over the Closing Price on January 10, 2014 and a Multiple of More Than 20 Times Beam’s Latest 12 Months’ EBITDA*1
- Creates the World’s #3 Premium Spirits Player with Portfolio of Leading Brands Across Key Spirits Categories, Enhanced Global Reach and Unparalleled Expertise in the Fast-Growing Whisky Category
OSAKA, JAPAN and DEERFIELD, ILLINOIS – JANUARY 13, 2014 – Suntory Holdings Limited and Beam Inc. (NYSE: BEAM) today jointly announced that they have entered into a definitive agreement under which Suntory will acquire all outstanding shares of Beam for US$83.50 per share in cash or total consideration of approximately US$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*1 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.
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. Beam’s President and Chief Executive Officer 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’s Board, said, “I am delighted that we can announce this agreement with Beam, a company with a portfolio of leading global brands, including Jim Beam and Maker’s Mark, and a strong global distribution network. 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.”
*1LTM EBITDA before charges/gains as of September 30, 2013
Unparalleled Breadth in the Fast-Growing Whisky Category
“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,” said Matt Shattock, President and Chief Executive Officer of Beam Inc. “Together we will be a global leader in distilled spirits with the #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,” Shattock continued. “Backed by the expertise and the financial resources of Suntory, the people of Beam look forward to working with the Suntory team to continue outperforming our global market and to building on the proud traditions and deep heritage of our brands across all the major spirits categories.”
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*2, 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.
Creating Substantial Value for Beam Stockholdersy
“The attractive valuation which has been achieved for Beam stockholders is a result of the successful strategy and excellent execution by the worldwide Beam team,” said Beam Chairman David Mackay. “Indeed, Beam will have achieved a total shareholder return of 106%*3since Beam became a standalone spirits company in October of 2011.”
Suntory intends to fund the transaction through a combination of cash at hand and fully committed financing provided by The Bank of Tokyo-Mitsubishi UFJ. Mitsubishi UFJ Morgan Stanley is acting as exclusive financial advisor to Suntory and Cleary Gottlieb Steen & Hamilton LLP is acting as legal advisor. Centerview Partners and Credit Suisse are serving as financial advisors to Beam and Sidley Austin LLP is serving as legal advisor.
*2By Value. Excludes local spirits
*3Based on Bloomberg Total Shareholder Return function
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)*4. Suntory’s alcoholic beverage business encompasses high-quality brands represented by its flagship single malt whisky “Yamazaki”, “The Premium Malt’s” beer, wine, and ready-to-drink (RTD) brands. In recent years, Suntory Whiskies are becoming increasingly popular among consumers worldwide, as they gain a reputation for quality, supported by success at some of the world’s most renowned spirits competitions. 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 Limited. 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). For more information on Suntory, please visit www.suntory.com