The Beam Suntory Merger: Value Creation and Antitrust Effects

Abstract

This paper explores the merger between Beam and Suntory as well as the industry, history, and the anti-trust effects caused by the merger of the two companies. Using this case, we analyze Beam and Suntory’s merger strategy to meet the growing distribution needs of their business in making the best spirits in the world. By outlining the important aspects of the Beam Suntory merger, such as the two firms’ market positions, deal making, price adequacy, and financing, the purpose of this case study is to provide the background of a real merger case and to show its mechanism and complications. We also scrutinize the implications on antitrust in the merger. In fact, there were no contractual remedies in the merger agreement from the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) who approved the merger. This case also shows the opportunities and challenges in the growth of Beam Suntory with the combined firms’ competitive position. Even though losses after the cross-border merger incurred due to the change in management, Beam Suntory could regain its momentum and make up for its initial loss over time. Beam and Suntory both benefited from the merger because it can save time and money by using each other’s distribution centers and resources to expand globally.