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Jim Beam Bought Out

Jim Beam, one of the largest American whiskey and bourbon producers, has recently engaged in a deal with Suntory Holdings for a buyout. Suntory Holdings, a Japanese company, is purchasing Jim Beam and all subsidiaries for $13.6 billion. While only being valued at $8 billion a year ago, Jim Beam has been growing rapidly and was valued at $11 billion before the deal was made. Suntory Holdings will pay the $13.8 billion in cash, and expected to pay up to $16 billion total for the acquisition (including previous debts held by Jim Beam). At $83.50 a share, Jim Beam stock has raised around 24% since word of the purchase began. Suntory Holdings is interested in expanding its already impressive portfolio to become third in the world in premium spirits.

Suntory Holdings, makers of the first Japanese whiskey, already have holdings in beverages and spirits along with interests in such companies as Pepsi and Subway. With the addition of Jim Beam, and its subsidiaries, Suntory Holdings is on course to be third in the world in market share. Jim Beam also owns Pinnacle, the #4 vodka in the United States, along with Maker’s Mark and other spirits. The deal, which is being framed as a business relationship rather than a buyout, will allow a more global market for Jim Beam. While primarily based in the US, holding around 30% of market share and seeing a 10% increase in total sales, Jim Beam has also had rising sales in China but has been largely stunted in other areas, especially India.

With the deal in place, Jim Beam expects to continue to rise in global markets while maintaining its strong hold in the United States. Suntory Holdings, including soon to be acquired Jim Beam, expects over $4 billion in sales annually from liquor.

Despite the large deal, Jim Beam will remain largely unchanged in structure. Matt Shattock, president and CEO, will continue to run the company out of Illinois. The buyout was not due to Jim Beam’s need, but rather due to the rising success. Premium whiskey sales are the fastest growing markets in the Western world, and are rising in Asian markets as well. In addition, flavored vodka’s, including many of Jim Beam’s Pinnacle varieties, is also on the rise. Whereas historically flavored vodka captured only 10% of the market share, it is expected to nearly triple in coming years.  This deal also will benefit stock holders, who have seen a return of 106% since October 2011, and minimize downsizing, with most of the staff being retained through the deal. While not yet finalized, the deal is expected to go through in the second quarter of 2014.

In Ohio Jim Beam is the 13th highest selling liquor. Crown Royal, Fireball, and Black Velvet also made the top 10, along with Jack Daniels at number 1, making whiskey the most popular choice of liquors in Ohio’s top 10. On the other hand, Kamchatka, which is owned by Beam Inc, is the number 1 selling Vodka and 3rd best overall selling liquor in Ohio.

For more information:

http://www.forbes.com/sites/maggiemcgrath/2014/01/13/jim-beam-maker-gets-13-6-billion-buyout-from-japans-suntory/

http://www.thedrinksbusiness.com/2013/05/beam-defies-takeover-pessimists/

https://www.comapps.ohio.gov/reports/ohio.liquor.sales.txt

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