It was revealed today that Beam, the all-spirits company spun off by Fortune Brands in 2011, has agreed to be acquired by Suntory for $13.62 billion, upon approval from Beam Inc. shareholders. Suntory already distributes Beam’s products in Japan, and Beam distributes Suntory’s products in several other Asian markets. The deal is targeted for completion in the second quarter of 2014.
Given numbers from the Impact Databank, the deal will make Suntory the world’s fourth-largest spirits company, behind Diageo, India’s United Spirits Limited, and Pernod Ricard; Bacardi will now be fifth. By dollar amount, this is a bigger deal than the Fortune Brands/Pernod takeover of Allied Domecq in 2005.
Assuming the deal goes through, this will put a lot of new whiskeys under Suntory’s roof. In addition to their own Suntory, Yamazaki, and Hakushu brands, and Scottish brands Bowmore, Auchentoshan, Glen Garioch, and McClelland’s, they will now own all the associated Jim Beam brands, Maker’s Mark, Canadian Club, Laphroaig, Ardmore, Teacher’s, Alberta Distillers, Cooley, and the Spanish DYC brand. They’ll also own the still-growing Pinnacle flavored vodkas, Courvoisier cognac, Sauza and Hornitos tequilas, Gilbey’s, and Skinnygirl cocktails.
What’s this mean to you, the whiskey drinker? Probably not much. Beam CEO Matt Shattock and the current management team will be left in place to run the business. Bourbon, Irish, Canadian, and Scotch whisky are all growing strongly. Given Suntory’s record with Morrison Bowmore, it seems unlikely that they’d change anything with their new acquisitions. Should we worry about Suntory owning both Bowmore and Laphroaig, and possibly closing one Islay distillery as unwelcome internal competition? Not for now, when both are selling well, though it may become a factor if there’s a downturn; but in that case, everything is going to be in play anyway.
The deal will increase Suntory’s debt load considerably; Moody’s Investors Service indicated that they would be evaluating the company for a re-grading in light of it. Should we worry about prices going up to cover the debt? Realistically, at this point in the whisky market…would we notice?
This was a sale that everyone interested in the industry had been expecting, at least on the “Beam sold” end. As a purely spirits company that was neither family-owned nor large enough to fend off purchasers, Beam was widely considered as a very likely takeover target. The “Suntory acquired” part was more of a surprise, in that one company is swallowing them whole. That’s the only potential downside; that a richer purchaser might have been able to put more into the new brands than Suntory will, but that’s all speculation.
In the end, it looks like a ‘move along, nothing to see here’ moment. Just another swapping in the game that has gone on for decades. Suntory has a good track record; rest easy. We might even see more Suntory whiskies in the world market.
Meanwhile, in a much, much smaller deal that was also announced today, two Tasmanian distilleries are merging. Lark distillery will acquire Old Hobart distillery and the Overeem brand. Both companies will remain as separate brands and entities, Overeem becoming a wholly owned subsidiary of Lark. Perhaps more importantly, Bill Lark will be reducing his time at the distillery and becoming the Lark global brand ambassador, and Casey Overeem will be doing the same. We’ll wait to see if this means more Tasmanian whisky in America.