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Beam To Buy Pinnacle Vodka, Calico Jack Rum Assets For $605 Mln - Update

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4/23/2012 9:13 AM ET

Beam Inc. (BEAM: Quote), a premium spirits company, on Monday agreed to buy fast-growing Pinnacle Vodka and Calico Jack rum brands and other related assets from spirits and liqueur manufacturer White Rock Distilleries for $605 million in cash. The company expects the acquisition to be significantly accretive to adjusted earnings per share beginning in 2013.

The acquisition would be completed in the second quarter of 2012, subject to customary closing conditions and regulatory approvals.

Beam's President and Chief Executive Officer Matt Shattock said, "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 expects that the synergy-driven addition of Pinnacle would significantly enhance its presence in the large, growing vodka category and that Pinnacle will become one of its largest Power Brands. The company expects the 2012 volume of Pinnacle Vodka, the fourth largest imported vodka brand in the United States, would exceed 3 million 9-liter cases.

Pinnacle's unflavored and flavored variants have each achieved the one-million case threshold. Pinnacle sells at a suggested retail price of $12.99-13.99 per 750ml bottle.

Shattock added, "With our plans to substantially increase brand investment in Pinnacle, plus our marketing and innovation capabilities and our global distribution assets, we look forward to taking Pinnacle to the next level and establishing Beam as a leader in the sizeable vodka category."

The company estimates the acquisition will be approximately neutral to 2012 earnings per share before one-time items, and accretive by $0.05 to $0.10 per share in 2013, with increasing accretion in 2014 and beyond.

Beam also said it has identified significant potential cost synergy opportunities, which are expected to exceed 20 percent of the brands' net sales. These opportunities would particularly be from leveraging Beam's U.S. distribution and supply chain scale, procurement benefits and overhead efficiencies, it said.

In pre-market activity, Beam shares are currently trading at $56.79, down $0.23 or 0.40 percent.

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by RTT Staff Writer

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