BF.B Brown Forman Corp

Recently, liquor producer, Beam Inc. (BEAM), announced the completion of its acquisition of renowned Irish whiskey maker Cooley Distillery. Beam got hold of this leading spirits company for about $95 million on a debt-free basis.

As per the transaction, Beam paid Cooley shareholders $8.25 in cash in exchange of every Cooley share. The acquisition is expected to facilitate Beam in building brand portfolio while enhancing market share in the world’s fastest growing spirits categories.

Beam expects earnings from the addition of Cooley’s brands to increasingly reflect in Beam’s financial statements after 2012. The acquisition will have no impact on fiscal 2012 earnings.

About Cooley Distillery

The award winning Cooley Distillery, based in Cooley Mountains, Ireland, was founded in 1987. Cooley is one of the only three sources for Irish whiskey. Cooley has a huge production capacity and sales approximately 250,000 9-liter cases per year, which includes its brands, private label products and bulk sales to third-party customers.

The product portfolio of the Irish distillery includes Kilbeggan Irish whiskey, Tyrconnell Single Malt, Connemara Peated Single Malt and Greenore Single Grain Irish whiskey.

Our Take on the Acquisition

We believe that Beam’s deal with Cooley provides a solid gateway for Beam to enter into one of the spirits industry's fastest growing categories. The Irish whiskey category grew 11.5% in 2010 to 4.86 million cases, according to a report released by Impact Databank. Moreover, the acquisition will facilitate Beam in adding more consumers and building a strong platform for future growth.

Deerfield, Illinois-based spirits giant Beam engages in producing and selling branded distilled spirits products worldwide. The company’s portfolio includes 10 of the world’s top 100 premium spirits brands and some of the industry’s fastest growing innovations.

Worldwide, the company generated 2010 sales of about $2.7 billion on volume of 33 million 9-liter cases. Beam was formerly part of Fortune Brands, which separated into two publicly traded companies, Beam Inc. and Fortune Brands Home & Security Inc. (FBHS).

Beam, which competes with well-established players, such as Diageo plc (DEO) and Brown-Forman Corporation (BF.B), currently has a Zacks #5 Rank, implying a short-term Strong Sell rating on the stock. However, the company retains a long-term Neutral recommendation.

 
BEAM INC (BEAM): Free Stock Analysis Report
 
BROWN FORMAN B (BF.B): Free Stock Analysis Report
 
DIAGEO PLC-ADR (DEO): Free Stock Analysis Report
 
FORTUNE BRD H&S (FBHS): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research