• Investment Banking

Suntory's $16 Billion Jim Beam Acquisition Marks Big Win for Morgan Stanley–MUFG Alliance

Morgan Stanley’s partnership with MUFG has garnered the third-largest cross-border transaction in Japanese history, the latest in a series of cross-border successes for the alliance.

In January, 2014, Japan’s Suntory Holdings acquired US-based Beam Inc., creating the world’s third-largest premium spirits company. The story behind the $16 billion acquisition provides a look inside how the Morgan Stanley partnership with Mitsubishi UFJ Financial Group (MUFG) made possible the third-largest cross-border transaction in Japanese history.

The joint venture between Morgan Stanley and MUFG, Japan’s largest bank was initiated five years ago to help position the firm to execute the most complex transactions on behalf of its clients. Since the beginning of the partnership, cross-border mergers and acquisitions have seen a remarkable recovery.

In recent years, Morgan Stanley has been involved in a series of transactions for Suntory. In July, 2013, the firm led the $4 billion initial public offering (IPO) of its subsidiary Suntory Beverage & Food (SBF) as joint global coordinator, which was the largest IPO in the consumer staple sector in more than a decade.

"Despite the large transaction size and increased volatility in the global equity markets, we were able to generate high-quality demand from around the globe—such as SWFs, prominent, global long-only investors and consumer specialists," says Morgan Stanley’s Takeshi Wakamatsu, Head of Global Capital Markets in Japan. "We were able to accomplish this through the mobilizing and seamless execution of the entire Morgan Stanley global distribution franchise."

The landmark IPO by the Japanese company, whose products include RTD coffee, RTD tea, carbonated soft drinks (including Orangina), fruit and vegetable juices, and sports drinks, helped it pursue growth strategies both in Japan and overseas, including the $2 billion acquisition of Lucozade and Ribena from GSK shortly after the IPO, for which Morgan Stanley also acted as the company’s sole buyside advisor.

To further its strategy for growth, Suntory issued a joint announcement with Beam on Jan. 13, 2014. With Morgan Stanley serving as exclusive financial advisor to Suntory, the companies announced that they would enter into a definitive agreement where Suntory would acquire Beam for $83.50 per share in cash. The transaction totaled over $16 billion and provided a critical step for Suntory, as it accelerated the global expansion of its alcoholic-beverages business.

The successful acquisition of Beam enriches Suntory’s portfolio, with the addition of iconic brands, such as Jim Beam Bourbon, Maker's Mark Bourbon, Sauza Tequila, Pinnacle Vodka and Canadian Club Whisky. The acquisition also leaves Suntory among the strongest spirits platforms in the US, which is the largest spirits market in the world.

As advisor to Suntory in the acquisition of Beam, Morgan Stanley also further leveraged its well-established relationship with MUFG. Bank of Tokyo-Mitsubishi UFJ, the core commercial banking unit of MUFG, provided the bridge-financing commitment to the Japanese spirits maker, demonstrating the ability of the strategic alliance to provide seamless service to clients.

“Through the joint venture and the partnership that we have with MUFG, we were able to deliver a significant single-sourced bridge loan to support the advisory services, allowing our client to achieve its corporate goal of becoming a global powerhouse in the industry,” says Managing Director Benjamin Frost, Head of Consumer M&A in Investment Banking in New York.

“The ability to offer ‘one stop shop’ full-service capability—ranging from the global M&A advisory to the financing—has been the ultimate competitive advantage for us to support the Japanese clients looking for overseas acquisitions," says Haruo Nakamura, head of Investment Banking in Japan.

Suntory’s acquisition of Beam is an example of how, with the vision to anticipate such opportunities, Morgan Stanley has built the necessary relationships with partners such as MUFG to help clients take advantage of opportunities when they arise.

“Collaboration is imperative if we want to differentiate ourselves from our competitors and provide exceptional services to our clients,” says Kazunari Kato, Managing Director with Consumer Coverage in Investment Banking in Tokyo. “We are fortunate, because both Morgan Stanley and MUFG are best-in-class in what they do, and the combination can be extremely powerful.”

This feeling of respect spans the global team. Frost notes: “This deal underscores the power of the Morgan Stanley-MUFG alliance to bring together the relationships and expertise of both firms.”

Get Your Career Started At Morgan Stanley