Illinois-based Beam Inc is best known as the maker of Kentucky bourbons such as Knob Creek and Maker's Mark, as well as the eponymous Jim Beam, but the group's drinks cabinet draws together brands from around the world, including Sauza tequila, Courvoisier cognac and Harvey's Bristol Cream to generate annual sales of $2.51bn.
The agreed sale of Beam follows shortly after Suntory completed its acquisition of drug group GlaxoSmithKline's legacy soft drinks business, including the Ribena and Lucozade labels, for £1.35bn. The Japanese whisky and beer group is already well-known for acquiring the Orangina brand a little over four year ago. The company also holds the rights to bottle Pepsi and Schweppes in some countries.
The sale of Beam, which offers shareholders a 25% premium to the recent share price, will trigger a colossal windfall for activist shareholder Bill Ackman's Pershing Square hedge fund, which is thought to hold 12.8% of the stock.
Ackman is widely credited with grooming the business for a sale by pressing for its 2011 demerger from a sprawling conglomerate which was then called Fortune Brands, with interests ranging from Moen taps and Mast Lock security products to Titleist golf equipment. On completion of the sale to Suntory, Beam will have delivered a 106% return for its shareholders since becoming a stand-alone business in October 2011, chairman David Mackay said as he urged shareholders to support the deal.
Ackman's long-fought success at Beam comes just two months after he admitted his aggressive short position in New York-listed vitamin supplements group Herbalife was "$400m to $500m" in the red. He nevertheless insisted he still believed this short bet - which has dragged him into a public disagreement with fellow hedge fund tycoon Carl Icahn - would eventually be vindicated. Other US stocks on which Ackman has brought his activist views to bear include Wendy's, Target Corporation and Borders Group.
The acquisition of Beam by Suntory is thought to be the third largest acquisition of an overseas business by a Japanese corporation. The only larger foreign deals were SoftBank's purchase of US rival Sprint Nextel, and Japan Tobacco's acquisition of Britain's Gallaher, the firm behind Benson & Hedges cigarettes.
Now a global drinks group with sales of 1.85tr yen (£11bn), Suntory started life in 1899 as a wine producer and importer in Osaka, founded by Shinjiro Torii. In the 1920s, his firm laid claim to having developed the first Japanese malt whisky, which became known as Tory's Whisky.
The British and French brands within the Beam stable are largely the legacy of Fortune Brand's participation, along with Pernod Ricard, in the 2005 break-up acquisition of London-listed drinks group Allied Domecq. Two years later Fortune Brands went on to sell its wine interest to another US group, Constellation Brands.
Suntory chairman Nobutada Saji said the acquisition of Beam would make the enlarged group the world's third largest maker of premium spirits, with combined sales of $4.3bn. "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."
(Published by The Guardian – January 13, 2014)