Jim Beam to be sold to Japanese Suntory Conglomerate

[wantonebad]

Full story

Jan. 13, 2014 at 9:56 AM ET Per NBC news.

Bottles of Jim Beam bourbon whiskey are displayed for sale inside the American Stillhouse gift shop at the Beam Inc. distillery in Clermont, Kentucky,...
Bloomberg / Bloomberg via Getty Images

Jim Beam bourbon, the iconic American liquor, is being acquired by Japan's Suntory in a deal worth $16 billion.

Suntory said on Monday it plans to buy Beam for $16 billion, including debt, making the Japanese company the world's third-largest maker of liquor.


Beam's brands include Jim Beam, Maker's Mark, Sauza, Canadian Club and Courvoisier.


The $16 billion transaction includes $2 billion in assumed debt. Suntory will pay $83.50 per share in cash, a 25 percent premium to Beam's closing share price of $66.97 on Friday.

The transaction, which has been unanimously approved by each company's board of directors, is expected to close in the second quarter, subject to Beam stockholders' approval, regulatory approvals and other customary closing conditions.

Suntory has a portfolio of spirits, with whiskies including Yamazaki and Hakushu as well as Midori liqueur and other beverages. It already distributes Beam's products in Japan, while Beam distributes Suntory's products in Singapore and other Asian markets.

Suntory President and Chairman Nobutada Saji said in a statement that the acquisition will help Suntory further its global growth. The combined company is expected to have annual liquor sales of more than $4.3 billion.

Beam President and CEO Matt Shattock and the Deerfield, Ill., company's current management will continue to run the business.

[GradyPhilpott]

I read that a few days ago.

Is nothing sacred?

[wantonebad]

Originally Posted by GradyPhilpott

I read that a few days ago.

Is nothing sacred?

I know what you mean Grady, it's hard not to have a little economic "protectionism" streak go through you when you hear things like this, but I guess if Budweiser can be sold to a foreign company nothing is sacred and everything is for sale...

[GradyPhilpott]

Originally Posted by wantonebad

...if Budweiser can be sold to a foreign company nothing is sacred and everything is for sale....

Indeed.

[mtrunner]

Originally Posted by wantonebad

I know what you mean Grady, it's hard not to have a little economic "protectionism" streak go through you when you hear things like this, but I guess if Budweiser can be sold to a foreign company nothing is sacred and everything is for sale...

Everything has a price unfortunately.

[Wesley Crusher]

Four Roses is owned by Kirin, I believe?

[Dan Pierce]

As long as it's still made in Kentucky...............
dP

[jvo300]

I always wonder what the foreign conglomerate is going for in this type of transaction. It doesn't seem like they bought a distressed company on the cheap. So they must think they can run it better than the existing owners (more profitably and/or more expansion)? I just don't get the motivation.

[wantonebad]

Originally Posted by jvo300

I always wonder what the foreign conglomerate is going for in this type of transaction. It doesn't seem like they bought a distressed company on the cheap. So they must think they can run it better than the existing owners (more profitably and/or more expansion)? I just don't get the motivation.

Value in a takeover or purchase isn't based solely on replacing management and running the entity better. Sometimes buyers just want a brand, or to strengthen their market share, or to broaden their portfolio. Suntory does things here, they eliminate competition and gain a foot hold in a whole new nitch of the whiskey market.

Warren Buffet doesn't buy troubled companies, he's made billions by buying blue-chips and maximizing profits.

[psv]

Well, Chrysler is now owned by Italian. And so on.

The notion of a country or nation brand is dead. It is all about international corporations from now on (and has been for a while).

[wantonebad]

Originally Posted by psv

Well, Chrysler is now owned by Italian. And so on.

The notion of a country or nation brand is dead. It is all about international corporations from now on (and has been for a while).

We're getting there, but not quite yet... Budweiser is one thing, but GM or Ford won't be under foreign control anytime soon, and you won't see a European or Asian takeover of IBM or Apple either, their management would never make the same mistakes August A. Busch IV made. JMHO

[Dr. Robert]

I'm getting thirsty reading this post.....,I want one bourbon one scotch one beer

[anilzat]

Is it not considered a monopoly when a corporation has this much power over one product, like ma bell did and was broken up. I think it stunk when ma bell was broken up, it was a great corporation, service was excellent.

[wantonebad]

Originally Posted by anilzat

Is it not considered a monopoly when a corporation has this much power over one product, like ma bell did and was broken up. I think it stunk when ma bell was broken up, it was a great corporation, service was excellent.

Anti-trust issues are considered by U.S. federal courts, they don't have jurisdiction over a foreign entity in so much as their global acquisitions.

[psv]

Originally Posted by wantonebad

We're getting there, but not quite yet... Budweiser is one thing, but GM or Ford won't be under foreign control anytime soon, and you won't see a European or Asian takeover of IBM or Apple either, their management would never make the same mistakes August A. Busch IV made. JMHO

Well, they might have been if there was a true free market. US government stepped in to save GM, German governement stepped in to save Opel, the French government did their part etc.

Only Sweden tried the free market approach, government didn't intervene so SAAB went under.

[K7Baixo2]

Bourbon has been....hot recently. The WSJ did a very interesting article yesterday on this purchase which included other good information. Link

[SUBversive]

Since bourbon can only be made in America and is governed by us law experts see no change at all with the sale. In fact this will probably add to and assist the import to Asia. Huge trade tariffs were taken down in South Korea and sales are expected increase. Apparently young Japanese go for bourbon. I'm no expert but heard a bourbon expert interviewed on NPR the other day.

[Gaijin]

Jim Beam, Maker's Mark and Four Roses for that matter are all so loved by the Japanese. You cannot go into a grocery store, liquor store or a bar or restaurant without seeing some. They are household names for drinkers here. As long as they continue to make it in Kentucky and not a lot of people lose their jobs I am fine with it. Sad a bit as an American but fine.

Its not going away like RCA just being bought.

[subtona]

Japanese whiskey is hot hot hot, this is a huge play for them.

[zama]

I dont claim to be a M&A expert but do work in the medical industry where this goes on a lot. My understanding of the evolution of the space goes something like this:
From the 50-80's Companies bought other companies that did not compete with them from other industries to diversify their risk to their core business (often chasing higher growth sectors)...
The 90's through to the early 2000's you tried to buy companies that may be in the same industry but have non competing products, in the hope that 2+2=5
In the last 10 years the M&A world tells you buy companies just like you, hope that you don't lose too much share i.e. 2+2=3.9, but in the meantime gut their back office staff, finance, HR, customer service, retain the sales teams and create distribution and manufacturing efficiency against the vendors, thereby tipping the equation back over 4....

We live in a world economy the thought that companies are immune to sale is a myth. CEO's are paid to maximise short term share price (to appease institutional/super fund investors) not act in the long term interest of the traditional corporate values. 90% of their remuneration is paid in shares and options. I read that in the 1950's the CEO of the fortune 500 companies averaged 15 times the average salary of their staff, by 2000 that figures was 300 times, the average life span of a CEO is a couple of years, they are there to pump the share price short term and are directly rewarded for doing so, and we wonder how we end up in global financial crisis.

[wantonebad]

Originally Posted by subtona

Japanese whiskey is hot hot hot, this is a huge play for them.

True, but more importantly, like Gaijin said, the Japanese are really hot for Bourbon, as is the rest of the world!! I do think the craze will die down, but demand right now is through the roof, people love bourbon. The resurgence of cocktail programs and prohibition era mixology has made certain spirits jump in market share and various whiskeys are front and center for this attention!!

[Dr.Brian]

For relaxing times, make it Suntory time.

[Gaijin]

Originally Posted by Dr.Brian

For relaxing times, make it Suntory time.

Nice Bill Murray quote. Lost in Translation.

[Hooper]

It truly is a global market!! No such thing as borders, Cash is king!!

[Rock]

One of the things we have all had to come to terms with in the last 40 years is the 'loss of identity' with our 'national' brands being globalised. For me one of the hardest is Jaguar owned by Tata.
In Australia, the news of the Jim Beam (bit of an icon here in my youth) take-over sparked a recollection of the purchase of Bundaberg Rum (one of our few native drinks) by the British Diageo company in 2000.
One wonders how long it will be before the sci-fi prediction of everything owned by a handful of mega-companies comes to pass.

[zama]

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