Jim Beam sold to Japanese whiskey maker Suntory in the worlds third largest international food and beverage deal. Suntory paid $13.6 billion for the purchase and took on Beams debt, paying $16 billion in all. The chief executive of Jim Beam, Matt Shattock will hold his position and run the American end of the business from the headquarters near Chicago. Share prices rose 24% with the sales announcement, making for a 106% return for shareholders since 2011. The acquisition makes Suntory the worlds third largest producer of distilled beverages, with all sales totaling to $4.3 billion annually. Beam and Suntory have worked closely in the past, the companies benefit from a distribution deal in which the foreign company is allowed access to the home companies supply and seller networks. The deal highlights that Suntorys main focus is still on the liquor market, an assertion that may have come into question with recent purchases of European soft drink companies.
Jim Beam was once part of a larger conglomerate called Fortune Brands, but share holders pressed for it to be broken away and groomed for a sale. Beams former affiliation with Fortune Brands has left it with several French and British whiskey brands under its wing, which might be a reason for Suntorys interest. Jim Beam Chairman David Mackay encouraged the changes, citing the potential profits for all shareholders. Hedge fund tycoon Bill Ackman is particularly pleased with the sale, as it is believed his portfolio holds about 12% of Jim Beam stock. The sale is expected to be finalized in the second quarter of 2014 after shareholder approval is confirmed, but it is unlikely anyone will turn down Suntorys offer of a 25% premium on the price of each piece of stock of Beam Inc. With Jim Beam sold to Japanese whiskey maker Suntory, president Nobutada Saji expects their entry into the lucrative American liquor market to have big benefits for his company.
Suntory was started as a wine importing company by Shinjiro Torii in 1899. In 1920 Torii created the first Japanese single malt whiskey 1920’s, and it came to be known as Tory’s Whiskey. Recently Suntory has been looking to foreign shores to expand their business, acquiring Frances Orangina Schweppes group in 2009, as well as New Zealands Frucor Group. Adding Jim Beam to their stable allows Suntory access to dozens of popular labels like Sauza tequila, Makers Mark bourbon, and Courvoisier cognac. Once it is finalized that Jim Beam has sold to Japanese whiskey maker Suntory, the now-global company will have a strong brand in all of the premium bourbon, scotch, Canadian, Irish, and Japanese whiskey markets. Whiskeys are currently the fastest growing liquor market in the western world, with several small distilleries entering the fray similar to craft beer breweries. The sheer number of entries and the continued rapid growth of the market have Suntory poised to rake in massive profits. Because how can a company that sells both alcohol and soda fail to make a profit?
By Daniel O’Brien