Report: Tensions High At Beam Suntory As Cultures ClashJune 15, 2016
Two years after Beam Suntory was created via a $16 billion blockbuster deal, the spirits giant continues to suffer growing pains, according to the Financial Times. When Suntory Holdings acquired Beam Inc. in May 2014, it gave the Japanese conglomerate a strong U.S. presence—and one of the world’s best-known whiskey brands in Jim Beam.
But, as the F-T reports, the deal also saddled Suntory with debt of roughly $15 billion—around five times its EBITDA. That massive debt load has constrained investment and hampered Beam Suntory’s plans for global expansion, leaving the company heavily reliant on just two markets—the U.S. and Japan.
There has also been tumult within the company’s leadership. Just weeks after the Beam acquisition closed, Suntory Holdings tapped Takeshi Niinami as its chief executive. The F-T reports that Niinami—the first Suntory chief executive from outside the company’s founding family—has been especially assertive and far more active in Beam Suntory’s management than Japanese executives traditionally have been in foreign takeovers. As he told the F-T, “It wasn’t clear who was in control (of Beam Suntory). I told Matt (Shattock, Beam Suntory’s chief executive) that I am the boss of the entire Suntory Holdings.”
Meanwhile, tensions remain high regarding the issue of an IPO in the U.S. According to the F-T, the Suntory board agreed around the time of the deal’s closing that it would launch a public offering in the U.S. within three years of the merger, with plans to use the proceeds for the lion’s share of its debt repayment. However, that plan has been put on hold amid opposition from Suntory Holdings’ founding family, which controls nearly 90% of the company. The delay has apparently upset Beam executives who were promised an IPO.
The Beam leadership team has undergone extensive upheaval since the Suntory acquisition, with most of the top management having already moved on. Still, Shattock, who was Beam’s chief executive prior to the deal, told the F-T that turnover at the drinks group is at its lowest in three years. “They realize that this investment is made for a very long term, and therefore they now have a parent and a home which will be here for many, many years to come,” he said.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.