Ackman Cashes In On Beam For $608 Million

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An SEC filing reveals Bill Ackman’s Pershing Square Capital Management sold a part of its highly profitable investment in BEAM Inc (NYSE:BEAM) in two transactions last week aggregating 7.3 million shares.

Pershing Square offloaded 6 million shares on Thursday at an average price of $83.28 per share, and another 1.3 million shares on Friday at an average of $83.36 per share, as Ackman decided to book some of the gains accrued after the announcement of BEAM Inc (NYSE:BEAM)’s acquisition by Japanese drinks maker Suntory last month.

Shareholder activism pays off

Whiskey-maker BEAM Inc (NYSE:BEAM) was spun off from the erstwhile conglomerate Fortune Brands Inc. Pershing Square was instrumental in the break-up of Fortune into three separate companies representing its whiskey, golf and home goods and security businesses respectively.

Fortune sold its golf business in May 2011 to sports group Fila Korea and Mirae Asset Private Equity, a private equity firm in South Korea, for $1.23B in cash.

Its home goods and security business was hived into a separate company that listed on the NYSE as Fortune Brands Home & Security in October 2011.

The spin-offs laser-focused the inherent value in the whiskey business, Fortune’s crown jewel that owned brands such as Jim Beam and Maker’s Mark.

Prior to the spin-offs, Fortune Brands as a whole had a market capitalization of just $7B. In contrast, Suntory is paying $83.50 per share of BEAM Inc (NYSE:BEAM) in a $13.6B all-cash deal.

Ackman’s vision

“As a standalone business, Beam now has many strategic alternatives available to the company, including a sale of the business, a merger with another spirits company, and the acquisition of other brands,” Ackman said in a letter to investors in November 2011. “We believe the spirits industry will see significant consolidation over the next several years, and Beam’s leading global positions in bourbon and tequila could entice several bidders or merger partners in the future. In the meantime, we are excited to be owners of this high quality, standalone business, particularly given its significant growth opportunity in international markets and through brand extensions and product innovations in the U.S,” he further said.

BEAM Inc (NYSE:BEAM) vaulted 25% on January 13, the day after Suntory announced its acquisition of the company, netting Ackman an estimated $375M in paper profits.

Pershing still owns a slice of the Beam pie

According to the filing, as on January 31, Pershing continues to beneficially own an aggregate of 13,518,545 shares in BEAM Inc (NYSE:BEAM), representing approximately 8.3% of the outstanding shares of its common stock.

BEAM Inc (NYSE:BEAM) closed at $83.30 per share Friday.

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