Hard stuff

14 January 2014 By Robert Cole

The Johnnie Walker distiller could top Suntory’s $16 bln offer. Rival Pernod Ricard would find it harder but not impossible to bid, too. Either could reap some cost savings. But there are strategic, financial and antitrust reasons why a counterbid looks like a long shot.

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Suntory Holdings is to acquire U.S. spirits group Beam for $16 billion including debt. The deal will help the Japanese group challenge Diageo and Pernod Ricard in efforts to create the world’s third-largest global spirits company.

Suntory will pay $83.50 a share in cash for Beam, a 25 percent premium to its closing price on Jan. 10. The price represents a valuation of 20 times Beam’s EBITDA for the year ended in September.

The new group will have $4.3 billion of sales from brands including Jim Beam, Maker’s Mark and Knob Creek bourbons, Teacher’s and Laphroaig scotch whiskies, Canadian Club whisky, Courvoisier cognac and Sauza tequila, as well as Suntory whiskies Yamazaki and Hibiki.

Beam’s management will continue to run the business, which is based outside Chicago. “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,” said Nobutada Saji, president and chairman of Suntory.

Mitsubishi UFJ Morgan Stanley advised Suntory. Centerview Partners and Credit Suisse are working with Beam. The Bank of Tokyo-Mitsubishi UFJ is financing the purchase.

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Suntory will pay $83.50 a share in cash for Beam, a 25 percent premium to its closing price on Jan. 10. The price represents a valuation of 20 times Beam’s EBITDA for the year ended in September.

Mitsubishi UFJ Morgan Stanley advised Suntory. Centerview Partners and Credit Suisse are working with Beam. The Bank of Tokyo-Mitsubishi UFJ is financing the purchase.

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