Kirin, Suntory scrap planned merger deal
- Source: Global Times
- [00:30 February 09 2010]
- Comments
Japanese beverage giant Kirin and its smaller rival Suntory said Monday they had scrapped plans to merge and create one of the world's largest beer and soft-drink companies.
Kirin, Japan's top brewer, said the two firms disagreed over whether the merged company would be publicly listed, while privately held Suntory cited discord over how control would be split between the long-time rivals.
The merger talks started in July as both firms expanded aggressively overseas at a time when their home market is declining due to a shrinking population, an economic downturn and changing consumer tastes.
Analysts at the time welcomed the creation of a potential food and beverage giant with annual sales of about $42.5 billion, saying it would give the merged entity more pricing power.
A merger would have been the largest in the Japanese beer and soft-drink markets and would have rivaled sales of beverage empires such as Belgium-based Anheuser-Busch InBev and Coca-Cola of the United States.
Kirin president Kazuyasu Kato told a news conference that the company would seek another merger partner as part of its global strategy, without naming a possible candidate.
Tokyo-based Kirin Monday broke the news that talks had collapsed.
Kirin said that it had been talking with Suntory "on the premise that the new entity would be managed as a listed company in order to ensure appropriate management independence and transparency," while Suntory held a different view.
Therefore, the talks were "unlikely to result in the establishment of a company that would fulfill Kirin's aim of developing as a leading global company," it said.
Suntory, a major whisky maker that is the country's number-three brewer after Kirin and Asahi, said the two parties "could not bridge the gap on the merger ratio and other factors."
The Suntory family, which established the company in 1899, retains a stake of nearly 90 percent and reportedly may have gained a controlling share of more than 30 percent in a merged company.
In a statement, Osaka-based Suntory said it had "decided that it would be difficult to build a new entity in the style that our company has pursued, judging from the negotiations."
Its president Nobutada Saji said Suntory "will continue taking on challenges to become a leading general beverage and food company to grow in the global market."
Kirin's shares dived on the news Monday, shedding as much as 8.5 percent in afternoon trade to 1,321 yen ($14.78).
However, holding that Kirin would have controlled 70 percent of the combined entity – instead of equally sharing the control with its smaller rival – the Wall Street Journal interpreted Kirin's walking away as avoiding a nasty hangover.
Agencies – Global Times
