Beam to be sold in $16 billion deal

(Bloomberg) — Beam Inc., whose brands include Jim Beam and Maker's Mark, agreed to be bought by closely held Japanese whiskey and beer maker Suntory Holdings Ltd. in a $16 billion deal to create the world's third-largest premium spirits company.

Investors in the maker of Jim Beam and Canadian Club liquor will get $83.50 in cash per share, Osaka, Japan-based Suntory said today in a statement. That's 25 percent above Beam's closing price Jan. 10.

Beam President and CEO Matt Shattock and Beam's current management will continue to run the business. The company will remain based in north suburban Deerfield, IL, where there are about 400 Beam employees, according to a spokesman.

"Suntory has a highly decentralized model with respect to operations and management," the spokesman wrote in an email to Crain's. "They have advised us they anticipate no major changes to Beam's business platform or workforce."

Suntory, the maker of Yamazaki whiskey and the Premium Malt's beer, is seeking to boost overseas growth as the population in its home country shrinks and ages. The company in 2012 had explored an offer for Beam alongside Diageo PLC.

Beam, whose largest shareholder is activist investor Bill Ackman's hedge fund, in 2012 got 59 percent of its revenue from North America and 21 percent from Europe, the Middle East and Africa.

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'STRATEGICALLY, IT MAKES SENSE'
“Strategically, it makes sense for Suntory,” said Trevor Stirling, an analyst at Sanford C. Bernstein & Co. in London. “I'm a little surprised they decided to go it alone, but at the moment there are low yen interest rates.”

The takeover would be the largest overseas acquisition by a Japanese company since Softbank Corp. acquired Sprint Communications Inc. for $21.6 billion last year. Fueled by a strong currency, Japanese companies embarked on an overseas buying spree that peaked with $113.5 billion worth of deals announced in 2012, data compiled by Bloomberg show. With the yen weakening, the value of overseas deals announced last year dropped to about $46 billion, the data show.

The takeover is the largest this year and the sixth-largest ever in the beverages industry, according to data compiled by Bloomberg. Beam was formed during the breakup of Fortune Brands Inc. in 2011 — since then, the company acquired Pinnacle Vodka & Calico Jack Rum Brands in 2012 and sold Select Brands last year.

Mr. Shattock has recently tried to lure drinkers and boost revenue with flavored liquors, such as Pinnacle pumpkin pie vodka and maple bourbon. Net sales in the three months ended Sept. 30 fell 4.5 percent to $598.7 million as results in Beam's Asia Pacific and South American region lagged the company's expectations.

ACKMAN CONTROLS 13 PERCENT
Ackman's New York-based Pershing Square Capital Management LP is Beam's largest shareholder, with a 13 percent stake, according to data compiled by Bloomberg. Ackman had owned a stake in Fortune Brands and pushed the company to break up, leading to the split.

Bloomberg News reported in December 2012 that Suntory had considered making an offer for Beam alongside Diageo, the world's biggest distiller.

While the acquisition has “very little cost synergies,” it allows Suntory greater exposure to the U.S., the world's most profitable spirits market, and to expand Beam's brands in faster-growing Asian markets, Stirling said.

“Suntory has virtually no U.S. presence,” Mark Swartzberg, an analyst at Stifel Financial Corp. in New York, said in a research note today. “This will take their share from less than 1 percent to 11 percent.”
The deal also gives Suntory a major presence in bourbons, he said.

The $16 billion transaction value includes assumption of Beam's outstanding net debt, according to the statement. The company has $2 billion in total debt, data compiled by Bloomberg show.
Suntory Beverage & Food Ltd., the soft-drinks unit of Suntory Holdings, raised about $4 billion last year in Asia's biggest initial public offering.

Ackman discloses 12% stake In newly public Burger King

Hedge-fund manager Bill Ackman just reported a 12% stake in the newly public shares of Burger King Worldwide (BKW). The head of Pershing Square Capital Management has 41,922,908 shares of the Whopper maker, according to the filing.

Ackman is Fortune Brands' largest holder

(Crain's) — Activist investor Bill Ackman has taken an 11% stake in Fortune Brands Inc.

The stake would make Mr. Ackman, founder and trustee of New York-based hedge fund Pershing Square Capital Management L.P., Fortune Brands' biggest shareholder.

The news followed a Securities and Exchange Commission filing this morning that included the news that Mr. Ackman took a 16.5% stake in Plano, Texas-based J. C. Penney Corp. Inc.

Best known for its Jim Beam, Maker’s Mark and Courvoisier alcohol brands, Deerfield-based Fortune Brands’ two other businesses are golf and home and security products. The company’s shares are up 7.7% to $56.03 after rising as high as $58.92 after the market opened Friday.

Mr. Ackman is known for buying undervalued stocks and pushing for board changes and seats to drive up share prices then selling his stake for a profit. Some of the changes he's pushed in the past have included divestitures of weaker divisions or spinning off more profitable ones. Among the companies he has invested in are Kraft Foods Inc., Target Corp., McDonald’s Corp., Citigroup Inc., Wendy’s International Inc. (now Wendy’s Arby’s Group Inc.), Yum Brands Inc., Dr Pepper/Snapple Group Inc. and Visa Inc.

Fortune Brands did not respond to requests for comment.

The news was first reported by CNBC.

Ackman, major creditor offer to invest $3.9 billion in General Growth

(AP) — Two major investors in General Growth Properties Inc. are joining Brookfield Asset Management in offering to inject a combined $6.5 billion in fresh funds into the shopping mall operator to help it emerge from bankruptcy protection.

General Growth said in a statement late Monday that its board is weighing an offer from Fairholme Capital Management, one of its largest unsecured creditors, and Pershing Square Capital Management, one of its largest shareholders, to invest $3.93 billion. It said the new equity capital investment is valued at $15 a share.

The offer would be teamed up with one from Canada's Brookfield Asset Management, which last month said it would invest $2.6 billion in cash in exchange for General Growth shares.

Chicago-based General Growth said the combined investments, along with it issuing $1.5 billion of debt, would give it the cash it needs to emerge from bankruptcy protection and pay unsecured creditors in full in cash.

General Growth also said William Ackman, who runs Pershing Square Capital Management, resigned from General Growth's board of directors in conjunction with the hedge fund's participation in the investment offer.

General Growth, the nation's second-largest shopping mall operator, piled up $27 billion in debt by the time it sought shelter from creditors last April. It was the largest real estate bankruptcy in U.S. history.

Last month, it rejected a $10-billion takeover offer by rival shopping mall giant Simon Property Group Inc. that valued the company at about $9 a share.

The Brookfield investment, which values General Growth at $15 a share, is seen as essentially setting Brookfield up as a "stalking horse" bidder as General Growth prepares to solicit buyout offers.

Indianapolis-based Simon has signed a nondisclousure agreement and has begun looking at the company's books even though its offer was rebuffed.

Ackman's role criticized by General Growth creditors

(Reuters) — General Growth Properties Inc.'s unsecured creditors and suitor Simon Property Group Inc. on Tuesday criticized William Ackman's role in the mall owner's restructuring plan, alleging conflicts of interest given his position as a director and largest shareholder.

Ackman has backed a reorganization plan that calls for his Pershing Square Capital Management hedge fund to offer Brookfield Asset Management certain protections in return for the Canadian firm financing General Growth's stand-alone exit from bankruptcy.

That proposal rivals a roughly $10-billion takeover offer by Simon, under which unsecured creditors, who hold about $7 billion of its debt, would get a full recovery of their claims in cash.

Under the Brookfield-backed plan, the form of their recovery — cash or stock — is not certain as it depends on General Growth raising up to $5.8 billion more.

The official committee of General Growth's unsecured creditors said in a court filing that the agreement between Pershing Square and Brookfield effectively restricts General Growth from considering alternative transactions because it puts the company into "an obvious conflict of interest situation."

"The Debtors must choose between the best interests of the estates and the economic interests of one of their most active and vocal directors," it added, referring to Ackman.

Simon, a General Growth creditor, also questioned the arrangement between Brookfield and Ackman's Pershing Square in a separate filing Tuesday.

Under General Growth's plan, Brookfield would receive seven-year warrants to purchase 60 million shares at an exercise price of $15 per share. Until the warrants are approved by the bankruptcy court, Pershing Square will provide interim protection.