UK: Diageo, Suntory mull move for Beam Inc - report

By | 9 December 2012

Beam Inc has been tagged as a takeover target since it came into being

Beam Inc has been tagged as a takeover target since it came into being

A report in a UK newspaper today (9 December) has claimed that Diageo and Suntory held talks earlier this year with a view to making a move for Beam Inc.

The Sunday Telegraph cited unnamed sources as saying the two companies were in discussions in the Spring and Summer about acquiring Beam. The US-based spirits company, which was formed when Fortune Brands offloaded its golf and home & security divisions last year, has been seen as a takeover target since it came into being in October, 2011.

While no quotes appeared in the news story, the Telegraph said that Diageo had also made contact with private equity companies about teaming up for Beam. A spokesperson for Diageo declined to comment when contacted by the paper.

Diageo, which is keen to gain traction in the Bourbon category, would need a partner to overcome anti-trust issues were it to take over Beam. Suntory, meanwhile, has manoeuvred to reduce its exposure in Japan, where its beer business has struggled in a stagnant market. Three years ago, it bought Paris-based soft drinks producer Orangina Schweppes for around US$3.8bn.

In September, Suntory consolidated its distribution partnership with Beam in Japan, by saying it will be replacing Ashai as distributor of Jim Beam and Maker's Mark in the company from the beginning of next year. The Japanese firm will be Beam's sole distributor in the company.

Since becoming a pure-play spirits company, Beam has made a number of acquisitions, most notably Irish whiskey producer Cooley Distillery a year ago and the Pinnacle vodka and Calico Jack rum brands in April.

Although Diageo remains in talks with the owners of Jose Cuervo to take a stake in the Tequila brand, a move for Beam, which owns Sauza Tequila, would signal an end to the tie-up. The existing sales, marketing and distribution deal expires in June.

Expert analysis

Beam Inc. (BEAM) - Financial and Strategic SWOT Analysis Review

Beam Inc. (Beam), formerly known as Fortune Brands, Inc, is a premium spirits company. The company offers branded distilled spirits products. The product portfolio of the company consists of bourbon whiskey, Scotch whisky, Canadian whisky, tequila, cognac, rum, cordials, and ready-to-drink pre-mixed cocktails. The renowned brands offered by the company include Jim Beam Bourbon, Canadian Club Whisky, Maker’s Mark Bourbon, Sauza Tequila, Courvoisier Cognac, Teacher’s Scotch, Laphroaig Scotch, Knob Creek Bourbon, Cruzan Rum, Basil Hayden’s Bourbon, Kilbeggan Irish Whiskey, Hornitos Tequila, Skinnygirl Cocktails, EFFEN Vodka, Pucker Vodka and Sourz Liqueurs among others. The company’s major markets includes North America, Australia and Europe, and also maintains presence in the markets of India, Brazil, Russia, Central Europe, Asia, and other geographies. The company is headquartered in Illinois, the US. The company is expanding its operations as evident from its recent acquisition related agreement with White Rock Distilleries to acquire the fast-growing Pinnacle Vodka and Calico Jack rum brands and other related assets for $605m in cash.

Sectors: Mergers & acquisitions, Spirits

Companies: Diageo, Suntory, Beam Inc, Fortune Brands, Cooley

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