Suntory billionaire taps Jim Beam

YUKI YAMAGUCHI AND GRACE HUANG
Last updated 13:08 15/01/2014
Suntory whisky
Reuters

GLOBAL ASPIRATIONS: Buying the maker of Jim Beam turns Suntory into the world's third-largest maker of premium spirits.

Nobutada Saji
Getty Images
NOBUTADA SAJI: The 68-year-old Suntory executive was willing to strike the deal even after Beam's market value climbed US$1.4 billion.

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Nobutada Saji's grandfather made Suntory Holdings a household name in Japan. This week, the grandson took a step toward transforming the family business into a global beverage giant.

Suntory's announcement on Monday that it agreed to buy US distiller Beam for US$16 billion ($19 billion) caps a series of overseas acquisitions under Saji, a US-educated billionaire who sports a trademark silver-flecked moustache. Acquiring the maker of Jim Beam bourbon will turn the closely held Suntory into the world's third-largest maker of premium spirits, according to the company.

Founded by Shinjiro Torii in 1899, the company's family ownership strengthened Saji's ability to do what it takes to grow globally, said Kazuhiro Miyashita, a board member at Tokyo-based research company Inryosoken.

The Beam takeover would be largest overseas by a Japanese company since SoftBank bought control of Sprint for US$21.6b in a deal announced in 2012.

"Compared with presidents at rival Japanese beer makers, Mr Saji has a bigger aspiration to do business globally," Miyashita said by phone. "This acquisition is huge, and he may have thought he has to seal the deal while he's still in charge."

Saji took over as president of Suntory in 2001 and may be planning to retire as early as this year.

The 68-year-old executive was willing to strike the deal even after Beam's market value climbed US$1.4b since December 2012, when Suntory had balked at the Deerfield, Illinois-based company's takeover price. The executive learned from his father, who started a beer business that took 46 years to turn a profit, to see things through to the end, he said in a 2009 interview with the Asahi newspaper.

"This combination will create a spirits business with a product portfolio unmatched throughout the world and allow us to achieve further global growth," Saji said in the statement.

A shrinking and aging Japanese population is compelling Saji to look beyond Suntory's home market, where it sells drinks from canned coffee to beer, sponsors television shows and operates its own art gallery and concert hall. While demand for alcohol in Japan is dropping, worldwide sales of whiskey and other spirits are projected to climb an average of 4.9 per cent each year through 2017, data compiled by Bloomberg shows.

Shinjiro Torii started Suntory as a wine store in Osaka, Japan's second-largest metropolis. The company takes its name from a combination of the sun-like red circle that figured on the label of early drinks and the founder's surname.

Suntory built Japan's first whiskey distillery in 1923, at a time when most scoffed at the idea that Japan might compete with traditional whiskey distillers in Scotland and Ireland. Its Yamazaki, Hibiki and Hakushu whiskeys are now sought after internationally, commanding premium prices.

As Japan's economy roared ahead in the 1960s, Saji's late father Keizo, who also served as company president, saw an opportunity in beer despite the dominance of the Kirin and Asahi brands. When the unit finally turned a profit in 2008, the younger Saji went to his father's grave to report its success, he told the Asahi.

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Nobutada Saji himself eyed opportunities in overseas expansion more than three decades ago. In 1980, when he headed the company's US division, Suntory bought a PepsiCo bottling company serving the East Coast for 20 billion yen. In 2009, Saji bought French soda maker Orangina and New Zealand's Frucor.

Suntory still remains best known in its home market, where the face of actor Tommy Lee Jones graces billboards advertising its Boss-brand canned coffee. Overseas, actor Bill Murray's character in "Lost in Translation" introduced the company's name to filmgoers with the line, "For relaxing times, make it Suntory time".

The Torii and Saji clans, the descendants and in-laws of Suntory's founder, hold 89 per cent of the closely held company through Kotobuki Fudosan KK, an Osaka-based asset management company they control.

Saji and his wife own 8.93 per cent of the business and also own 5.45 per cent of Suntory Beverage & Food Ltd, a soft-drinks unit that raised about US$4b in Asia's largest initial public offering last year. The stake is established based on his holdings in the parent company and largest shareholder, Suntory Holdings.

Other family members involved in the business include Shingo Torii, vice president of Suntory Holdings, and Saji's nephew Nobuhiro Torii, a great-grandson of Suntory's founder.

An avid golfer and swimmer who holds an MBA degree from the University of California at Los Angeles, Saji has said he hopes to find a successor suited to leading a global company.

Asked last year if he may take on a bigger role at the parent company, where he's a board member, Nobuhiro Torii said he'd like to focus on the Suntory Beverage unit, of which he's chief executive officer, "at least for another couple of years".

The company's management style may need to change if Suntory wants to continue expanding overseas, said Naoki Fujiwara, Tokyo-based chief fund manager at Shinkin Asset Management.

"The management has to change from the family-run style that's the case today, and absorb more talent from outside," Fujiwara said in a phone interview.

- Washington Post/Bloomberg

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