Suntory buys Jim Beam owner for $16 billion

The Japanese Suntory has agreed to purchase the American Beam Inc., producer of Jim Beam bourbon and Sauza tequila, for $16 billion. The acquisition will allow Suntory to become the world's third largest producer of premium alcohol.

Photo: Alexander Miridonov, Kommersant / buy photo

Suntory and Beam announced yesterday that they have reached a definitive agreement on the transaction, which is expected to close in the second quarter of 2014. But it is known that one Beam share will cost Suntory $83.5 - this is 25% higher than the American company’s quotes on the New York Stock Exchange (NYSE) on January 10, when the cost of one share reached $66.97. In total, the Japanese will pay $16 billion, this amount includes Beam's debt ($2.4 million). The announcement of the deal yesterday made Beam shares the top gainers on the NYSE: by 20:00 Moscow time they had risen in price by 24%, to $83.05.

Suntory had been eyeing Beam since late 2012. Then the Japanese discussed the purchase in consortium with the British Diageo (Smirnoff vodka, Johnny Walker whiskey), which was considered the initiator of the deal. At that time, the amount that was planned to be paid for Beam was approximately $10 billion.

Suntory was founded in 1899 in Osaka. Produces whiskey and beer, liqueurs and soft drinks. Turnover in 2012 amounted to $17.6 billion. Beam Inc. created in 1901. Headquartered in Deerfield, Ohio. Sales in 2012 amounted to $2.5 billion (excluding excise taxes), or 34 million dal. In Russia, Beam products are sold through the international alcohol distributor Maxxium, while Suntory alcohol is sold by Veld-21.

As a result of the transaction, Suntory will become the world's third largest producer of premium alcohol, the companies said in a statement. According to Drinks International, Beam's best-selling products are American whiskey (bourbon) Jim Beam - 5.7 million decaliters were sold in 2012 (an increase of 8% compared to 2011) and Sauza tequila - 3 million decaliters (an increase of 9%). Both brands rank 34th and 77th respectively on Drinks International's list of the world's best-selling spirits. According to the same rating, Suntory sells the most Japanese whiskey Suntory Kakubin (85th place) - 2.5 million decaliters (an increase of 11%). “Suntory’s own products are specific in nature and focused mainly on Asian countries. Therefore, Beam is a very important acquisition for them, which will allow them to add internationally recognizable brands to their portfolio,” says Maxim Kashirin, CEO of Simple (an importer of elite alcohol). In Russia, according to his assessment, Suntory is represented insignificantly compared to the Beam brands, since it has not seriously looked at the Russian market before.

Oleg Trutnev

The Japanese fortified themselves with bourbon