Beam Suntory Inc. 2018

Abstract

In response to its shrinking domestic market, Japanese liquor company Suntory Holdings Limited (Suntory) acquired American liquor conglomerate Beam Inc. (Beam) in 2014 to expand its market share in the promising U.S. market. Although Suntory paid a premium price of US$16 billion, executives of both companies were confident that the deal would boost their performance as the third-largest combined entity in terms of sales value in the global distilled liquor industry. However, as the new combined entity, Beam Suntory Inc. (Beam Suntory), began the integration process, it encountered significant friction, particularly from its separate corporate cultures. The high acquisition price left Suntory with monumental debt, while the consolidated operations struggled to establish trust and efficiency. Suntory admitted in 2016 that Beam Suntory had not yet integrated. Had Suntory made a wise decision in acquiring Beam? Was the acquired firm worth the high price? Given that Suntory denied an initial public offering (IPO) of the acquired U.S. unit in early 2017, how should it cope with its monumental debt? How should Beam Suntory resolve its conflicts and achieve optimal integration to realize potential synergies?

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