By Naoko Fujimura Feb. 8 (Bloomberg) — Kirin Holdings Co. , Japan’s largest beverage company, ended talks to buy Suntory Holdings Ltd. that would have created the world’s fifth-biggest foodmaker after balking at a $10 billion asking price. Suntory President Nobutada Saji and other members of the founding family had been seeking a stake of at least 33.4 percent in the merged company, which would have given them veto power over major decisions, including takeovers. The companies started talks in July as a declining population and stagnant economy sapped demand for their products at home. “Kirin has been negotiating on the premise that the new entity would be managed as a listed company in order to ensure appropriate management independence,” the Tokyo-based brewer said in a statement today. Kirin shares extended their decline after the announcement, falling as much as 6.9 percent. The stock traded 4.9 percent lower at 1,372 yen as of 12:44 p.m. in Tokyo. Suntory wanted about 0.9 percent of a share for each Kirin share in a new holding company, a Suntory executive, who declined to provide his name, told reporters in Tokyo today. That would have valued closely held Suntory at 892 billion yen ($10 billion) based on Kirin’s last closing price. “It would have been difficult to create a new company as there were differences in opinions, including the merger ratio,” Suntory said in a faxed statement. Uniting the century-old beverage makers would have created a company with sales of $42.7 billion, surpassing Coca-Cola Co. ’s $31.9 billion and placing it behind Nestle SA , Unilever PLC, Kraft Foods Inc. and PepsiCo Inc. Japanese food and beverage makers have been expanding overseas to reduce their reliance on a population that’s forecast to shrink 10 percent by 2030. Overseas Expansion Kirin last year agreed to pay A$3.5 billion ($3 billion) to take full ownership of Lion Nathan Ltd., Australia’s second- largest brewer. It also bought almost half of San Miguel Brewery Inc. , partly funded by the sale of its holding in the Philippine brewer’s parent San Miguel Corp. Suntory purchased European drinkmaker Orangina Schweppes from Blackstone Group LP and Lion Capital LLP in November for an undisclosed sum, and Groupe Danone SA’s Australia and New Zealand drinks business Frucor for more than 600 million euros ($819 million) in 2008. Kirin ’s domestic beer sales dropped 0.9 percent by volume last year and Japan soft-drink sales plunged 7 percent. The brewer of Ichiban Shibori and Kirin Lager overtook Asahi Breweries Ltd. last year in Japanese beer sales for the first time in nine years. Suntory sells Brand’s health food and is the Japanese partner of Haagen-Dazs ice cream. Suntory is 89 percent owned by members of the founding family. Saji’s grandfather, Shinjiro Torii , started the company in 1899 and began building Japan’s first whiskey distillery in Osaka prefecture in 1923. To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net
See the original post here:
Kirin Scraps Suntory Takeover, Balking at Brewery’s $10 Billion Price Tag
