Tuesday, December 11, 2012

Suntory interested in Jim Beam maker

Suntory, Japan's biggest whisky maker, has its eye on a takeover of the U.S. distiller that makes Jim Beam and Canadian Club whisky, according to a Bloomberg article quoting an unnamed Suntory official.

The source confirms a Sunday Telegraph story yesterday that Suntory has talked to Diageo plc about a possible joint offer for Beam Inc. But the Bloomberg story goes on to say that the Japanese company, which declared 225 billion yen ($2.73 billion) of cash and savings in its last accounts, also has the wherewhithal to launch a bid on its own. Diageo faces regulatory hurdles that may discourage involvement.

Suntory has not talked officially with Beam and believes the company's current share price is too high to launch an immediate bid. It is compulsory in these Japanese-company-looking-abroad stories to say that this is because the Japanese population is shrinking. The Bloomberg article obliges.

It might also have been worth mentioning that the current high value of the yen makes foreign acquisitions pretty attractive at the moment, and that Suntory is currently in the middle of a major recasting of its North American whisky portfolio that is making it intimate with Beam for the first time. The backdrop to this story is that Suntory and its biggest whisky rival Asahi (Nikka) are about to swap U.S. partners. Suntory had a 40-year partnership with Brown-Forman (which makes Jack Daniel’s , Southern Comfort and Canadian Mist) while Asahi had been distributing Beam's Jim Beam and Maker's Mark. By the end of December, the portfolios will have switched, which means no more glorious Jim Beam marketing from Asahi and MTV's VJ Boo:

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