TOKYO, June 3, 2024 – Suntory Holdings has denied reports that it is in early discussions to acquire US brewing giant Boston Beer Co.
Last week, Boston Beer’s share price surged by 22%, reaching its highest point since March, following reports from The Wall Street Journal that the two companies were engaged in acquisition talks.
However, a Suntory spokesperson refuted the claims, stating, “There is no fact that we are in any negotiations with Boston Beer.”
Despite the denial, industry analysts remain divided on the potential benefits of a merger. Nadine Sarwat, an analyst at AllianceBernstein, expressed reservations about the deal’s feasibility, citing the “uncertain” performance of Suntory’s existing brands and the complexities of the US alcohol distribution system.
“Due to the US’s three-tier system and existing state laws, revenue and cost synergies would be limited to standard back-office cost-cutting,” Sarwat explained.
The two companies have a history of collaboration, having entered a partnership in 2021 to release RTD spirit drinks like Truly. However, Sarwat highlights that Suntory would need the approval of Boston Beer’s founder and former CEO, Jim Koch, whose “culture of innovation” remains integral to the company.
“An acquisition at a solid premium could offer a good solution,” Sarwat said. “But could Jim Koch think that Boston Beer is undervalued at today’s price?”
Boston Beer reported a strong first quarter this year, with net revenue rising 3.9% to $426 million and gross profit increasing to $186 million. The brewer achieved an operating income of $15 million compared to a loss of $14 million in the previous year.
While the future of the potential deal remains uncertain, the denial from Suntory suggests that further developments are needed before any acquisition can occur.
