Suntory completes US$16 bil. buyout of Jim Beam maker, eyes US market
May 2, 2014, 12:21 am TWN
TOKYO--Japan's Suntory Holdings said Thursday it had completed a nearly US$16 billion buyout of the firm behind Jim Beam bourbon, creating one of the world's biggest high-end spirits makers and giving it a foothold in the major U.S. liquor market.
But the debt-heavy deal did not impress Moody's which downgraded its credit rating on Suntory and said it would take “several years” to bring its balance sheet back to a less-leveraged state.
Suntory acquired all outstanding shares of Beam Inc. for US$13.8 billion, largely financed by bank loans, while it also took on about US$2.0 billion of the U.S.-based firm's debt.
The combined company, with about 3,400 employees, will be called Beam Suntory Inc. with plans to merge Suntory Liquors' spirits business by before the end of this year.
Combined sales of Beam Inc. and Suntory's spirits business were US$4.6 billion in 2013, according to a statement issued by Suntory.
The buyout, first announced in January, marks the latest foreign acquisition by family-owned Suntory and is part of a recurring trend for Japanese companies as they see their home market declining due to a shrinking population.
A strong yen in recent years also helped to propel the shopping spree as overseas deals were relatively cheaper for Japanese companies, although the pace has slowed as the yen sharply declined over the past year.
The Beam deal is the third-biggest overseas acquisition by a Japanese firm, after mobile carrier SoftBank's US$21.6 billion takeover of U.S.-based Sprint Nextel last year and Japan Tobacco's 2007 purchase of Britain's Gallaher for almost US$19 billion.
It also eclipses the value of previous Suntory acquisitions, including the US$1.56 billion purchase of the Lucozade and Ribena soft drinks brands in September.
“The transaction creates a company with the strong number three position in the global premium spirits market,” Suntory said in a statement Thursday.
Beam markets a range of bourbons and internationally known whiskies, having evolved from a small family base in the U.S.