Boston, MA 01/14/2013 (wallstreetpr) – Shares of BEAM Inc (NYSE:BEAM) peaked up more than 25 percent after news about its acquisition by Japanese rival Suntory surfaced. The stock closed at $83.42 in regular session.
Suntory’s offering of $13 billion or $16 billion including debts is the first public takeover announcement for the pure-play spirits maker since 2011 when it was formed out of Fortune Brands. There have been several other acquisition talks around the company from other interested rivals such as Diageo.
Investors may want to know if this latest bid will close the takeover chapter of the company or other rival bids may surface. Back in 2012 Diageo was reported to be interested in bidding for BEAM Inc (NYSE:BEAM) in a joint venture with Suntory. However, Diageo wouldn’t agree to pay more than $65 per share of BEAM. As a result, Suntory was left to go it alone in bidding for BEAM as Diageo went about establishing a position in North America with its own efforts.
Suntory has now come to make a bid for BEAM Inc (NYSE:BEAM) in excess of $85 per share, a far cry from the $65 per share that put off Diageo back in 2012. At this juncture we can now ask if a competing bid could emerge that would overturn Suntory’s interest. A closer look at the latest acquisition bid reveal some hurdles that would repel competing bids for BEAM Inc (NYSE:BEAM).
Rival bids hurdles
That BEAM Inc (NYSE:BEAM) will go to the Japanese whiskeys maker Suntory is seen in the unanimous approval of the deal by boards of both companies. However, stockholders of BEAM and U.S. regulators will have to give their approval for the acquisition to be completed. Given the premium takeover offering of more than $85 per share, it looks unlikely that BEAM shareholders would have any reservations against the deal.
The $425 million deal termination fee which drops to about $275 million in an alternative better offer before February 26, is also a hurdle for rival bids. Moreover, the fact that Diageo looks content with its progress in North America so far makes rival bids for BEAM Inc (NYSE:BEAM) unlikely.
