By James Atkinson
Suntory Holdings is set to acquire Beam Inc in a $US16 billion transaction that would create the world's third largest player in premium spirits.
The agreement announced late on Monday provides for Suntory to acquire all outstanding shares of Beam for US$83.50 per share in cash, a total consideration of approximately US$16 billion, including the assumption of Beam's outstanding net debt.
The transaction represents a 25 per cent premium to Beam's closing price of $66.97 on January 10, 2014; a 24 per cent premium to the volume-weighted average share price over the last three months; and a multiple of more than 20 times Beam's EBITDA for the 12-month period ended September 30, 2013.
The transaction, which has been unanimously approved by each company's board of directors, is expected to close in the second quarter of 2014, subject to Beam stockholders' approval, regulatory approvals and other customary closing conditions.
The transaction will create a stronger global player in premium spirits with annual net sales of spirits products exceeding $4.3 billion.
Beam said in a statement that its president and CEO Matt Shattock and the current Beam management team will continue to lead the business, which will be managed from Beam's headquarters outside Chicago, Illinois.
Suntory president and chairman Nobutada Saji commented: "I believe this combination will create a spirits business with a product portfolio unmatched throughout the world and allow us to achieve further global growth. We are particularly excited about the prospect of working more closely with Beam's excellent management and employees who will play an integral part in the growth of the business."
Beam’s Matt Shattock said that 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.
"Our combined global routes to market will expand our joint distribution footprint, and the powerful innovation capabilities both companies have developed will be a significant advantage," he said.
On completion of the transaction, Suntory and Beam aim to achieve growth in markets worldwide, including the United States, the world's largest spirits market, by leveraging a combined portfolio of strong brands, an expanded distribution network and fully sharing production and quality control know-how.
Suntory and Beam have an existing relationship under which Suntory distributes Beam products in Japan and Beam distributes Suntory's products in Singapore and other Asian markets.