In a major corporate deal between Japan and the U.S.
companies, the world's fourth largest sprit company
) has agreed to be acquired by the Japanese beverage company,
Suntory Holdings Ltd. in an all-cash transaction. This will be
the second largest acquisition of an American company by a
Suntory Holdings has offered $83.50 per share to acquire all
outstanding shares of the Deerfield, Illinois-based spirit maker.
The total buyout amount, including Beam's net debt, is
approximately $16 billion.
The Japanese beverage company's offer price is 25% higher than
Beam's closing price of $66.97 on Jan 10. Moreover, the valuation
comes at a multiple of 20 times of Beam's twelve-month earnings
before interest, taxes, depreciation and amortization (EBITDA)
ended on Sep 30 last year and a premium of 24% to the last three
months volume-weighted average share price.
Beam's, management, which now awaits approval from
shareholders and regulatory authorities, expects to close the
deal by the end of second-quarter 2014. After the deal is sealed,
Suntory Holdings will become the world's third largest whiskey
) and Pernod-Ricard SA and will reap annual revenue of about $4.3
Following the acquisition news, shares of Beam rose above the
bidding price and touched its all-time high of $83.61 during
yesterday's trading hours before closing at $83.42, up 24.6% from
the Jan 10 closing price. The company informed that shareholders
have received a return of approximately 106% since it began
operating as a standalone company in Oct 2011.
According to Bloomberg, Bill Ackman's hedge-fund firm,
Pershing Square Capital Management LP, which has 13% stake in the
company, reaped $342.5 million yesterday. In 2011, Ackman
prompted Fortune Brands Inc.'s management to spin off the
company, which led to sale of the golf unit and creation of Beam
Fortune Brands Home & Security Inc.
) as stand-alone units.
Since its operations as a standalone company, the maker of Jim
Beam and Maker's Mark has become an attractive takeover option.
With a range of bourbons in its product portfolio, Beam could
have been a strategic fit in Diageo's portfolio, which has only
However, at present, there appears to be minimal possibilities
of a takeover by any other prospective buyer since analysts
consider the offer price to be appropriate and a higher price
would become too expensive. Furthermore, the boards of both the
companies have mutually agreed on the transaction and set a hefty
termination fee of $425 million, which Beam will have to pay to
Suntory if the deal lapses.
Currently, Beam carries Zacks Rank #4 (Sell). Other
better-ranked wineries and distillers include,
Constellation Brands, Inc.
) sporting a Zacks Rank #1 (Strong Buy).
BEAM INC (BEAM): Free Stock Analysis Report
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