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Breakingviews: Bourbon M&A straight up

Monday, January 13, 2014 - 03:27

Jan 13 - Rob Cox explains what the Japanese Suntory's $16 bln deal for Beam means to the buyer as well as to rivals Diageo and Pernod.

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I've vote early on a Monday from urban for me but not for rob Cox who has spent little time looking at. Deems the sale for sixteen billion dollars to the Japanese some -- yes since 630 have been. I preventing this story so some -- holdings which is that giant Japanese. The average food and it's whose business -- and off the food beverage service last year. It's big sixteen billion dollars to -- beam that is the sort of holding company or portfolio that includes Jim beam. Maker's mark. Knob creek. How much other public and other we sort of expected -- to be sold after a lack an accompanying this like they're they're always at all a surprise or if they were part Fortune Brands which made titlist golf clubs -- boss' whole bunch of stuff. Black and came in yen and sort of act in it was an apple put out revolving updated split into three this is the big one. Of course though. So everyone knew that these guys belong in some other drinks company's portfolio. But everyone expected would be gadget has yet you. It's kind of missing the browns right they don't really have -- number -- it was a it was a turn out as well but it. You have got I mean I remember talking to there yes -- years ago oh is very clear when they bring out their drinks trolley at once and it's yet to got their corporate headquarters your liquor ideally where is the Berber and I was asking for suburban Boston area where where are that price is just -- -- writ so. Some -- holdings is a privately. We held company. -- that they have a spin off which is the food just recently went get a -- four billion dollars and not surprisingly they use some of that here. They are private companies that you republic like and they have -- they have this awesome corporate slogan which is. Yeah update -- a hot day which means basically go for it which means basically. You can pay twenty times yesterday I'll go somewhere there. Now ultimately it has faced a twenty times when he times he -- dot now if you look at it there have been drinks deals done. Single brands like absolute 120 times but a portfolio of brands some which are what they call -- grants optically exciting very unhappy. -- that they're not super premium they can't be globalized. You don't get back at a price and in fact. It's really more like thirteen times. When you look at C and it's not even a kind of -- whether it would seem like there's a lot of senators -- out there are no synergies and cost. There are they're talking about revenues and felt that -- put number on it very -- because there is its ability to sell cross sell and Yamasaki liquor -- -- do whatever it is red states and actually Japanese whiskey is pretty darn good so. There is an opportunity through the beam system vivid and likewise distribution system and in the end and in Japan obviously -- -- -- itself. Americans were fervent but you know look for -- -- which has -- CEO -- means it's time to come out sort of do you -- -- -- he'd he'd really destroy a lot of shareholder value by my reckoning. You know because there are synergies taxes the the operating profit of the of the target you're looking at a return a best of about 3% so. Now Japanese money's cheap but this is -- US deal right yet it couldn't do without really you have a lot of synergies. And they have to sell off about stuff for -- -- it it seemed very we will keep an eye on this deal and others as they. Perk up and we'll be back with more breaking news tomorrow.

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Breakingviews: Bourbon M&A straight up

Monday, January 13, 2014 - 03:27

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