Japan’s Suntory Holdings has denied being in early discussions to acquire US brewing major Boston Beer Co.
Boston Beer’s share price shot up around 22% last week, its highest price since March, following reports the two drinks companies were in early talks over a deal.
The news was first published by The Wall Street Journal on Friday (31 May), citing “people familiar to the matter”.
However, a Suntory spokesperson poured water on the speculation in a comment to Just Drinks today (3 June).
The spokesperson said: “There is no fact that we are in any negotiations with Boston Beer.”
Boston Beer has a market capitalisation of around $3bn, according to The Wall Street Journal, which said a deal would “likely include a premium to that”.
The article also noted talks may not result in a deal or that another suitor could emerge.
Nadine Sarwat, analyst at AllianceBernstein, said: “We believe that while it might be a good plan on paper, in practice the devil would be in the detail.”
She added the performance of Suntory’s existing brands was “uncertain”.
“Due to the US’s three-tier system and existing state laws that mandate beer and spirits-based alcohol (generally) be sold through different distributors and retail outlets, revenue and cost synergies would be limited to standard back-office cost-cutting,” she added.
The two companies have worked in tandem previously; in 2021, Suntory’s US spirits subsidiary Suntory Global Spirits (previously Beam Suntory) entered a long-term partnership with Boston Beer to release RTD spirit drink Truly and a number of other brands. Beam said at the time it was looking to increase its presence in the alcoholic-RTD segment.
In Boston Beer’s opening quarter results this year, net revenue rose 3.9% to $426m while gross profit grew from $156m in 2023 to $186m. The brewer booked an operating income of $15m compared to a loss of $14m the previous year.
Boston Beer’s former chief executive, Dave Burwick, retired in April and board member Michael Spillane took the reins.
Sarwat said Koch was “still central to the culture of innovation at the company and his succession planning remains a critical question for investors”, and “an acquisition at a solid premium could offer a good solution”.
However, she added: “Suntory would need Jim Koch's approval of the deal (regardless of if his vote is necessary) as he is a clear culture carrier of the firm and would ideally stay on for a few years. But could Jim Koch think that Boston Beer is undervalued at today's price?”
