Suntory, a privately held giant known for producing Japan's first whisky, has agreed to acquire the maker of Jim Beam and Maker's Mark bourbons and Teacher's and Laphroaig Scotch whiskies, for $13.6 billion.
Suntory, based in Osaka, is offering Beam shareholders $83.50 a share in cash, 25 per cent above Beam's closing stock price on Friday. It represents a multiple of more than 20 times Beam's earnings before interest, taxes, depreciation and amortisation for the 12 months ended September 30.
Including the assumption of debt, the deal, which was announced on Monday, is valued at $16 billion.
The transaction is the first major takeover of 2014, as deal makers expect corporate chiefs to expand their businesses by buying other companies.
The deal is the biggest ever struck by Suntory, whose beverage empire includes Yamazaki Japanese whisky, Bowmore Scotch and Midori liqueur. The company's previous largest transaction was its purchase of Orangina Schweppes from a consortium of investors for more than $3 billion in 2009.
Suntory was founded in 1899 and created Japan's first whisky producer in 1923, when the company's founder, Torii Shinjiro, built the Yamazaki distillery using the principles of Scotch whisky production.
In recent years, Suntory has been expanding aggressively overseas to counteract a shrinking market at home in Japan, where the population is declining. Its subsidiary, Suntory Beverage, controls the European drink company Orangina Schweppes, and last year bought the Lucozade and Ribena brands from GlaxoSmithKline for £1.35 billion.
In Japan, the sprawling Suntory empire spans fitness clubs, Subways restaurants, fresh flowers and golf ranges on top of the group's mainstay whiskey, beer and soft drinks businesses. Saji, whose grandfather founded Suntory over a century ago, was listed by Forbes as Japan's second-richest man in 2013 with assets of about $10.7 billion, after clothing magnate Tadashi Yanai of Uniqlo fame.
But in the US the company is perhaps best known for the commercial that Bill Murray's character recorded in the 2003 movie Lost in Translation, which featured the slogan: "For relaxing times, make it Suntory time."
Now it is adding Beam, one of the United States' most recognizable purveyors of bourbon and other spirits. The company was once known as Fortune Brands, a conglomerate that included disparate businesses like home and hardware products and golf balls. In late 2010, it announced that it would pursue a three-way split, becoming a liquor company.
Besides its namesake bourbon, the company also sells Canadian Club whisky and Courvoisier cognac.
Under the deal announced on Monday, the current chief executive of Beam, Matthew J. Shattock, and his management team would continue to lead the business.
Suntory's chairman, Nobutada Saji, said in a statement: "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."
The Japanese company had been considering a bid for Beam since the second half of 2011, according to a person briefed on the matter.
Suntory says it intends to pay for the transaction with cash at hand and financing provided by the Bank of Tokyo-Mitsubishi UFJ. It is unclear how much the company will need to borrow, but it may be a substantial amount: The conglomerate reported holding just $2.2 billion in cash as of Dec. 31, 2012.
The deal is expected to close by June 30, pending approval by Beam's shareholders.
Mitsubishi UFJ Morgan Stanley and the law firm Cleary Gottlieb Steen & Hamilton are advising Suntory. Centerview Partners and Credit Suisse are serving as financial advisers to Beam, and Sidley Austin is serving as legal adviser.
Hiroko Tabuchi contributed reporting from Tokyo.
©2014 The New York Times News Service
