Ackman’s Pershing Gains $335 Million on Beam After Suntory Deal

Jan 13, 2014 5:21 pm ET

Jan. 13 (Bloomberg) -- Pershing Square Capital Management LP, the activist hedge-fund firm run by Bill Ackman, made $335 million today on Beam Inc. if its stake is unchanged from Sept. 30, after Suntory Holdings Ltd. agreed to buy the company.

The $11.7 billion firm is Beam’s largest shareholder, with a 13 percent stake as of the end of the third quarter, according to data compiled by Bloomberg. Suntory, the closely held Japanese whiskey and beer maker, today agreed to acquire Beam for $16 billion including debt, sending the shares up 24 percent to $83.06 at 12:28 p.m. in New York trading.

Investors in the maker of Jim Beam and Canadian Club liquor will get $83.50 in cash per share, Osaka, Japan-based Suntory said today in a statement. That’s 25 percent above Beam’s closing price on Jan. 10. If New York-based Pershing still has 20.8 million shares, it stands to make $344.1 million from last week’s closing price once the deal is completed.

Ackman, 47, known for amassing stakes in companies and pushing them to make changes to boost share prices, gained 9.3 percent last year in his $5.1 billion Pershing Square International Ltd. fund, with bets on companies including Beam, Canadian Pacific Railway Ltd., Air Products & Chemicals Inc., Burger King Worldwide Inc., Howard Hughes Corp. and Procter & Gamble Co., according to the firm’s year-end investor update and latest regulatory filing.

Beam was formed in the 2011 breakup of Fortune Brands Inc., after Ackman sought to dismantle the assemblage of alcohol, home and golf products to boost shareholder value. The Titleist golf unit was sold that year and Beam and Fortune Brands Home & Security Inc. began trading independently.

Herbalife, Penney

Pershing Square has lost as much as $500 million betting against Herbalife Ltd., the vitamin and shake maker that Ackman called a pyramid scheme. Ackman said in October he replaced part of his bearish wager with long-term put options. The firm also made a wrong-way bet on retailer J.C. Penney Co., where Ackman spent more two years on the board before agreeing in August to exit.

Ackman’s firm also owns common shares of Fannie Mae and Freddie Mac, the two mortgage giants at the core of the U.S. housing market. He is seeking to salvage securities that were valued at more than $100 billion combined before the 2008 financial crisis, which many deemed worthless when the federal government took over the companies as markets unraveled. The firm said in November that it may seek talks with shareholders, management and the U.S. government, which owns almost 80 percent of the agencies.

Carolyn Sargent, a spokeswoman for Pershing Square with Rubenstein Associates Inc., declined to comment on Pershing’s gain on its Beam holding.

--Editors: Josh Friedman, Sree Vidya Bhaktavatsalam