Suntory Holdings Ltd, the closely held Japanese whiskey and beer maker, is exploring the possibility of making a takeover offer for the US distiller Beam Inc, according to an official of the Osaka-based company.
Suntory has held talks with Diageo PLC about a potential joint offer, the person said, asking not to be identified because the talks were private. Suntory and Diageo are not currently in discussions and Suntory can make the offer by itself, the person said.
Suntory will not make an offer at the current share price as it is too expensive, the person said. Beam’s stock has gained 17 percent so far this year.
Suntory has not approached Beam nor has it made a bid for the US company, the person said. Both Suntory and Diageo declined to comment on whether they are considering the deal. Calls to Beam’s media office were not answered.
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 population at home in Japan.
“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,” he said.
Diageo held talks with Suntory about buying Beam for more than US$10 billion, Britain’s Sunday Telegraph said in an article on Sunday, citing unidentified sources. Beam shares closed 1.5 percent higher at US$59.73 on Friday in New York.
Suntory has focused overseas acquisitions on non-alcohol beverages over the past five years, while its Japanese rival Kirin Holdings Co has spent more than US$12 billion to expand its alcohol business outside Japan in the period, according to data compiled by Bloomberg.
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, according a statement from the US-based company. Suntory already distributes Beam’s Canadian Club whisky, Laphroaig scotch and Sauza tequila.