Beam Inc. agreed Monday to acquire White Rock Distilleries Inc. in a $605 million deal that would add vodka and rum brands to its spirits portfolio.
White Rock, of Lewiston, Maine, is the maker of Pinnacle Vodka and Calico Jack rum, among other products. The company is on pace to sell about 3 million nine-liter cases in 2012, sparked in part by the popularity of Pinnacle's line of specialty dessert-flavored vodkas.
Deerfield, Ill.-based Beam, the distilled spirits unit spun off from Fortune Brands Inc. last year, pulls in revenue of $2.8 billion a year selling Jim Beam and Maker's Mark bourbon, Canadian Club whiskey and Cruzan Rum. The company is not strong in vodka, and said buying Pinnacle was a key to the deal.
"Pinnacle is an excellent strategic fit for Beam, giving us a strong and exciting growth platform in the sweet-spot of the attractive vodka category," Beam CEO Matt Shattock said in a statement. "The team at White Rock has really built something special with Pinnacle."
Beam expects the transaction to be neutral to earnings in 2012 and add 5 to 10 cents per share in 2013. Beam said it would finance the acquisition with its existing credit or new debt, or a combination of both.
The deal continues Beam's pattern of using small deals to build its portfolio, following Fortune Brands' 2008 purchase of Cruzan Viril Ltd. for $103.2 million and adding Cooley Distillery last year for $95 million. Shattock said that Beam intends to invest in the Pinnacle brand and expose it to Beam's larger marketing platform, following the model it has used with other acquisitions.
"Since the start of 2011, we'll have built our presence in ready-to-serve cocktails, Irish whiskey and now vodka with another bolt-on acquisition that will leverage substantial brand-building, distribution and cost synergies to deliver highly attractive growth and returns for our shareholders," Shattock said.
White Rock CEO Paul Coulombe mentioned Beam's marketing heft in explaining the decision to sell, saying, "I'm confident the team at Beam will utilize their tremendous reach, scale and passion to take Pinnacle to even greater heights and establish it as one of the spirits industry's truly iconic vodka brands."
Industry watchers have had Beam on their list as a possible takeover target after its spinoff from Fortune Brands last year.