US Regulators Approve Beam-Suntory Deal - Analyst Blog

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The acquisition of the world's fourth largest spirit company, Beam Inc. ( BEAM ), by Japanese beverage company, Suntory Holdings Ltd., moved a step forward after the U.S. Federal Trade Commission gave an important regulatory approval. The transaction will expectedly close in April.

The Deerfield, Ill.-based spirit maker yesterday announced that the U.S. Federal Trade Commission has granted an early termination of waiting period for review of the transaction under the Hart-Scott-Rodino Act, also known as HSR Act.

The HSR Act restricts companies in completing certain mergers, acquisitions and transfer of assets or securities, until they have duly filed all the documents with the U.S. Federal Trade Commission and Department of Justice.


Hence, as of now, Beam has to get the nod from the European Union and final approval from its shareholders. Management has called for a special meeting of stockholders on Mar 25, 2014 for approval of the transaction.

On Jan 13, Beam had signed a deal to be acquired by Suntory in an all-cash transaction. Suntory Holdings offered $83.50 per share to buy all outstanding shares of the American manufacturer of spirits. 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.

After the deal is sealed, Suntory Holdings will become the world's third largest whiskey company after Diageo plc ( DEO ) and Pernod-Ricard SA, and will reap annual revenues of about $4.3 billion.

The alcoholic beverage industry has been witnessing major consolidation in recent times. In Jan 2014, Anheuser-Busch InBev SA/NV ( BUD ) or AB InBev, in order to strengthen its position in the Asia-Pacific region, entered into an agreement with KKR and Affinity Equity Partners to reacquire its South Korean asset - Oriental Brewery - for a sum of $5.8 billion. Notably, it marked the second biggest alcohol transaction of 2014 after the Beam-Suntory deal.

Currently, Beam carries a Zacks Rank #3 (Hold). A better-ranked brewer worth consideration is Constellation Brands Inc. ( STZ ) with a Zacks Rank #2 (Buy).



BEAM INC (BEAM): Free Stock Analysis Report

ANHEUSER-BU ADR (BUD): Free Stock Analysis Report

DIAGEO PLC-ADR (DEO): Free Stock Analysis Report

CONSTELLATN BRD (STZ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BEAM , BUD , DEO , STZ

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