The executives of two age-old spirits companies can be excused for skipping the 5:00 rule and indulging in a toast Monday morning: The maker of classic American bourbon whiskey Jim Beam BEAM +24.56%, Beam Inc, has been acquired by Japanese spirits giant Suntory Holdings for $13.6 billion in cash, the companies announced Monday. Including the assumption of Beam’s outstanding debt, the deal is valued at $16 billion and very well could create a new global leader in spirits and whiskey.
Suntory, which was founded in 1899 and is a privately-held company known for producing Japan’s first whiskey, will acquire all outstanding Beam shares for $13.6 billion in cash, or $83.50 per share. The figure represents a 25% premium to Beam’s January 10 closing price of $66.97 per share, though it is less of a premium to the stock’s current price, which surged into the $80 range on news of the deal. Including the assumption of Beam’s debt, the $16 billion deal marks a multiple of more than 20 times Beam’s EBITDA for the 12-months ending on September 30, 2013.
Beam and Suntory’s combined liquor portfolio will boast a spirits offering including Beam’s Jim Beam, Maker’s Mark and Knob Creek bourbons, Canadian Club whiskey, Courvoisier cognac and Pinnacle vodka and Suntory’s Yamazaki and Hakushu whiskies, Bowmore Scotch whisky and Midori liqueur — among others. Once combined, the companies expect their annual net sales to exceed $4.3 billion.
Matt Shattock, the current Beam president and CEO who will continue to lead the business after the deal is complete, said in a statement that the deal is an exciting development that offers significant potential for growth.
“Together we will be a global leader in distilled spirits with the #3 position in premium spirits and a dynamic portfolio across key categories,” he said. “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.”
Shattock and Suntory chairman and president Nobutada Saji both expressed excitement to work with the other’s management team. The two companies already have what they describe as a “successful business relationship,” as Suntory currently distributes Beam products in Japan and Beam distributes Suntory products in Singapore and other Asian markets.
In a statement, Beam chairman David Mackay highlighted the benefit of the deal for shareholders, noting that the liquor company “will have achieved a total shareholder return of 106% since Beam became a standalone spirits company in October of 2011.”
The deal is expected to close in the second quarter of 2014 (pending approval from each company’s board of directors), and the current Beam management team is expected to remain in place, both figuratively and literally: Suntory and Beam said Monday that the business will continue to be managed from Beam’s existing headquarters, outside of Chicago, Illinois.
Following the announcement of the buyout, shares of Beam surged over 24% Monday morning and are currently trading for more than $83 per share. The spirits maker, which has been around since 1795, finished 2013 trading with an 8.8% return.
