Updated from 8:11 a.m to include opening share prices, analyst commentary and Pershing stake.
NEW YORK (TheStreet) -- Japanese whiskey maker Suntory Holdings is buying Beam (BEAM), in a $16 billion deal that will create an international alcohols conglomerate to take on the likes of Diageo (DEO) and and Pernod Ricard. The deal also will be a windfall for Pershing Square's Bill Ackman, who has been a long-time Beam investor and advocated the company's spin-off of Fortune Brands Home & Security (FBHS), a set of non-alcohol businesses owned by the company.
Deerfield, Ill.-based Beam said on Monday that Suntory will buy the company for $83.50 a share in cash, or approximately $16 billion, in a takeover that represents a 25% premium to Beam's closing stock price of $66.97 on January 10. The deal will create an international alcohols conglomerate with net sales of $4.3 billion, were the deal to close.
Beam's portfolio of alcohols incdudes 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. Suntory is the maker of Japanese whiskies Yamazaki, Hakushu, Hibiki, and Kakubin, Bowmore Scotch whisky and Midori liqueur. As part of Monday's transaction, Beam's President and Chief Executive Officer Matt Shattock and the current Beam management team will continue to lead the business and headquarters will remain in Deerfield, Ill.
"Our combined global routes to market will expand our joint distribution footprint, and the powerful innovation capabilities both companies have developed will be a significant advantage," Beam CEO Matthew J. Shattock said in a statement. Beam will allow Suntory to achieve growth in markets worldwide, including the United States, the company said.
Beam shares were rising 24% to $83.06 in early Monday trading, just below Suntory's offer price.
It is those share price gains where Ackman and Pershing Square played a crucial role.
"Bill Ackman ....stirred pot at fortune brands.... Let's not forget," Mario Gabelli, head of fund manager Gabelli & Co. said on Twitter on Monday. "And thanks----Bill," he added.
Ackman advocated for Beam's previous corporate incarnation, Fortune Brands, to stream-line its businesses by way of a series of spinoffs and asset sales. As a conglomerate, Beam's businesses included its popular alcohols brands, Acushnet gold brands and a set of home fixture and home security brands including Moen faucets and Master Lock.
In 2011, Fortune Brands sold its Acushnet golf businesses, which include Titleist and FootJoy, in a $1.225 billion deal. At the time of that transaction, Fortune Brands also agreed to spin off its home security and fixtures businesses in a deal that payed shareholders a $500 million special dividend and gave them a stock holding in Fortune Brands Home & Security when it began trading in the fall of 2011.
The remaining business, Fortune Brands' alcohol brands, continued to trade on the New York Stock Exchange and was renamed Beam Inc. to reflect its alcohol focus.
Those split-offs were praised by Ackman's value investing peers. At the Berkshire Hathaway (BRK.A) annual shareholder meeting in May 2013, Ackman's advocacy for a stream-lined Fortune Brands was given a deal-making award from the Heilbrunn Center for Graham & Dodd Investing at the Columbia University Business School.
Since then, Fortune Brands legacy businesses have all performed strongly in their independent listing on stock markets, capped off by Suntory's Monday takeover of Beam.
As of the third quarter, Pershing Square held a 12.77% stake in Beam, according to filings with the Security and Exchange Commission, making it the largest investor in the company.
Beam's takeover may help raise the valuations of competitors such as Brown Forman (BF.A) and Constellation Brands (STZ). Applying the 20 times earnings before interest, taxes, depreciation and amortization multiple that Suntory is using in its Beam bid would yield a valuation of $92 a share for Brown Forman and $100 a share for Constellation Brands, according to Timothy Ramey, an analyst with D.A. Davidson & Co.
Ackman has received criticism for a failed management revamp of J.C. Penney (JCP), which put the company on the doorstep of bankruptcy. He's also received criticism for advocating a short against supplements seller Herbalife (HLF), which has lost hundreds of millions of dollars as prominent investors take the other side of his trade.
On the other hand, Beam's sale to Suntory and the strong performance of Fortune Brands Home & Security represent some of Ackman's best investing work since the crisis. Monday's deal puts Ackman on a strong start in 2014 after a rough 12-months.
Pershing Square couldn't immediately be reached for comment.
-- Written by Antoine Gara in New York