Japan's Suntory Holdings is set to become the world's third-largest spirits maker after the acquisition of US-based Beam Inc, the owner of premium liquor brands such as Maker's Mark, Jim Beam and Canadian Club.
The deal is valued at about $16bn (£9.7bn, €11.7bn) including debt. Suntory will pay $13.6bn or $83.50 per share in cash, representing a 25% premium to Beam's closing price of $66.97 on 10 January.
The transaction has been approved by the boards of both the companies. It is expected to be completed in the second quarter, subject to Beam stockholders' approval and other regulatory approvals.
The transaction has come as Japanese beverage companies are looking to expand in overseas markets in line with the shrinking population in the home country.
'Stronger Global Player'
The transaction will bring Beam brands including Beam's Jim Beam, Maker's Mark and Knob Creek bourbons, Teacher's and Laphroaig Scotch whiskies, Canadian Club whisky, Courvoisier cognac, Sauza tequila, and Pinnacle vodka, as well as Suntory's Japanese whiskies Yamazaki, Hakushu, Hibiki, and Kakubin, Bowmore Scotch whisky and Midori liqueur under one umbrella.
The combined company is expected to generate annual sales of spirit products exceeding $4.3bn.
Upon the completion of the transaction, Suntory will become the third largest whiskey company and the fifth largest malt whiskey company by volume, according to International Wine & Spirit Research.
Beam's president and CEO Matt Shattock and the current Beam management team will continue to head the business, which will be managed from Beam's headquarters outside Chicago, Illinois.
"I believe this combination will create a spirits business with a product portfolio unmatched throughout the world and allow us to achieve further global growth," Nobutada Saji, president and chairman of Suntory's Board, said in a statement.
"This is a very exciting development that delivers substantial value for our stockholders and creates an even stronger global company with an excellent platform for future growth," said Shattock.
"Together we will be a global leader in distilled spirits with the #3 position in premium spirits and a dynamic portfolio across key categories. With particular strength in Bourbon, Scotch, Canadian, Irish and Japanese whisky, the combined company will have unparalleled expertise and portfolio breadth in premium whisky, which is driving the fastest growth in Western spirits."
Following the deal, the companies will target to grow in markets worldwide with their combined portfolio of strong brands, expanded distribution network and by sharing production and quality control know-how.
Suntory and Beam already have a tie-up under which Suntory distributes Beam products in Japan and Beam distributes Suntory's products in Singapore and other Asian markets.