Suntory Holdings Ltd., the closely held Japanese whiskey and beer maker, is exploring the possibility of making an offer for the U.S. distiller Beam Inc. (BEAM), according to an official of the Osaka-based company.
Suntory has held talks with Diageo Plc (DGE) about a potential joint offer, though the two aren’t currently in discussions and the Japanese company can make a bid by itself, said the person, who asked not to be identified because the talks were private.
Bottles of Jim Beam Brands Co. Black bourbon whiskey move down the conveyor belt at their distillery in Clermont, Kentucky, U.S. Photographer: John Sommers II/Bloomberg
Buying the Deerfield, Illinois-based maker of Jim Beam, Maker’s Mark and Canadian Club liquor would help Suntory boost overseas growth to offset a shrinking home population. Suntory won’t make an offer at the current price as it is too expensive, said the person. Beam stock has gained 17 percent this year.
“Speculation around Beam is not new, but had calmed down, and this reignites the debate,” David Belaunde, an analyst at Morgan Stanley, said in a note to clients. “While we would not rule out any scenario, we believe regulatory hurdles and other priorities may well limit the role that Diageo, specifically, might be willing to play in the near term.”
Suntory hasn’t approached Beam nor has it made a bid for the U.S. company, the person said. Suntory spokeswoman Naoko Tsuda declined to comment on whether they are considering the deal. Calls to Beam’s media office weren’t answered outside regular hours. Gilbert Ghostine, Diageo’s president for the Asia-Pacific region, declined to comment.
Diageo held talks with Suntory about buying Beam for more than $10 billion, the Sunday Telegraph said yesterday, citing unidentified U.K. financial-industry sources. There are no plans to restart negotiations between the two, according to a person familiar with the matter. Beam shares closed 1.5 percent higher at $59.73 on Dec. 7 in New York. Diageo rose 0.3 percent to 1,883.5 pence as of 9 a.m. in London.
Suntory has focused overseas acquisitions on non-alcoholic beverages over the past five years, while its Japanese competitor Kirin Holdings Co. (2503) has spent more than $12 billion to expand its alcholic business outside Japan in the same period, according to data compiled by Bloomberg.
Suntory bought French drinkmaker Orangina Schweppes Group in 2009 for an undisclosed sum and paid 600 million euros ($774 million) in 2009 for New Zealand’s Frucor Beverages Group Ltd.
The beverage maker entered China’s beer market in 1984 and later bought wine importer ASC Fine Wines Holding Ltd. This year, its China unit formed a 50-50 venture with Tsingtao Brewery Co., without disclosing the amount being invested.
Beam agreed in September to expand its Japan distribution alliance with Suntory starting next year, adding Jim Beam and Maker’s Mark, the company’s leading bourbon. Suntory already distributes Beam’s Canadian Club whisky, Laphroaig scotch and Sauza tequila.
Suntory had 225 billion yen ($2.73 billion) of cash and savings as of the end of June, according to a company statement.