Cleary, Sidley Line Up $16 Billion Beam Sale
Japanese brewer and distiller Suntory said Monday it has reached a deal to buy Beam, the maker of bourbon brands such as Jim Beam and Maker's Mark, in a cash deal worth roughly $16 billion, including the assumption of debt.
Osaka-based Suntory, which makes a range of alcoholic beverages that includes Yamazaki whiskey and Premium Malt's beer, will pay $83.50 in cash for each Beam share, representing a premium of 25 percent over the Deerfield, Ill.–based target's Friday closing price. The equity value of the deal is $13.6 billion, while Suntory will also assume more than $2 billion in debt, according to Bloomberg. The deal is expected to close in the second quarter of 2014—pending regulatory approvals—at which point Beam's current management team, including CEO Matt Shattock, will continue to run the business from the company's U.S. headquarters.
One of the world's most recognizable producer of alcoholic beverages, Beam was founded in 1904 and later became a subsidiary of Fortune Brands before becoming its own separate company when Fortune split its portfolio in 2011. In addition to Beam's namesake bourbon brand, Jim Beam, Suntory will also acquire the Maker's Mark bourbon brand along with fellow liquor brands Canadian Club whiskey, Courvoisier cognac, Hornitos tequila and Laphroaig scotch whisky. In its announcement, Suntory said the deal would create a global leader in the spirits industry—with combined annual net sales expected to exceed $4.3 billion—while expanding its presence in the United States. (At the moment, Suntory is perhaps best known in the U.S. for its placement, alongside actor Bill Murray, in the film "Lost in Translation.")
The two companies have a preexisting relationship—Suntory distributes Beam products in Japan, while Beam distributes Suntory products in Singapore and some other Asian markets—and the Japanese buyer has been interested in buying its U.S. counterpart for some time. Suntory has reportedly been considering a bid for Beam since 2011, according to The New York Times, and last year the Japanese company mulled over the idea of a joint bid with London-based spirits giant Diageo before opting instead to pursue Beam on its own.
The deal is the largest ever for Suntory, which paid $2.1 billion last year to buy two nutritional drink brands, Lucozade and Ribena, from GlaxoSmithKline. The deal is also one of the biggest overseas acquisitions by a Japanese company, and it comes a little more than a year after the largest such deal ever: SoftBank's $21.6 billion purchase of a 78 percent stake in Sprint Nextel in October 2012.
For legal advice on the Beam acquisition, Suntory has turned to longtime counsel Cleary Gottlieb Steen & Hamilton. The firm, which says it has advised Suntory on U.S. M&A matters for more than three decades, is fielding a team led by New York–based M&A partners Paul Shim and Benet O'Reilly. Cleary competition partners Mark Nelson and Robbert Snelders are also working on the deal, along with finance partner Margaret "Meme" Peponis, compensation and benefits partner Arthur Kohn, tax partner Jason Factor, compensation and benefits counsel Kathleen Emberger, IP counsel Daniel Ilan, environmental law counsel W. Richard Bidstrup, competition senior attorney Matthew Bachrack and tax senior attorney Jonathan Gifford. Also advising from Cleary are associates Katia Colitti, Lisa Connolly, Andrew Coombs, Charlotte Emin, Daniel Fernandez, Maxim Izvekov, Emma Johansson, Jiun Kim, James Langston, Joseph Lanzkron and Julia Rozenblit, as well as international lawyer Jaime Salas and law clerks Paul Imperatore, Nicolette Lotrionte and Greg McKay.
(In the past, Suntory has also turned to Magic Circle firm Clifford Chance for U.K. deals, including last year's deal with GlaxoSmithKline and Suntory's 2009 purchase of soft-drink maker Orangina Schweppes Group from its private equity owners for $3.8 billion. Simpson Thacher & Bartlett and Japanese firm Mori Hamada & Matsumoto advised the company on its $4.7 billion initial public offering last summer.)
Meanwhile, Sidley Austin is representing Beam with regard to the company's sale. Sidley's team is led by Chicago-based M&A partners Thomas Cole and Beth Flaming, as well as M&A senior counsel Frederick Lowinger. Sidley previously advised Fortune Brands in connection with the separation of that company's home security business and the Beam subsidiary. (Chadbourne & Parke also advised Fortune when it split up its holdings, working on the divestment of the company's golf equipment business.)
Kenton Rose serves as Beam's general counsel.