Lion Nathan agrees takeover terms with Kirin

Posted by Daniel Palmer on 27th April 2009

Lion Nathan has agreed terms on a takeover by Japanese giant Kirin Holdings.

The 54 per cent of the Australian brewer not currently owned by Kirin will be purchased for $12.22 a share, markedly above the $8.31 Lion was trading at when they went into a trading halt on Thursday morning.

The offer values Australia’s second largest brewer at about $6.5 billion, higher than the $6 billion estimated by many analysts.

beer deal

Both companies have signed a scheme process agreement, with an acceptable Scheme Implementation Agreement expected to be complete within seven days.

Geoff Ricketts, the Chairman of Lion Nathan, said the Board would unanimously urge shareholders take up the offer, which represents a price to earnings multiple of 12.5 on forecasts for FY09 profit.

“The Independent Board Committee of Lion Nathan will unanimously recommend that non-Kirin shareholders approve the offer, subject to approving a satisfactory scheme implementation agreement, no superior proposal and an independent expert’s opinion confirming that the offer is in the best interests of non-Kirin shareholders,” he advised. “We believe this is a very attractive outcome for Lion Nathan’s non-Kirin shareholders. It is a compelling offer at a significant premium to Lion Nathan’s share price.”

Lion Nathan added that the deal would create “exciting opportunities for existing management”, but maintained that specific roles were yet to be discussed. It is widely expected that Lion CEO Rob Murray will be rewarded with the top job as head of their Australian operations, which include that of Dairy Farmers and National Foods.

Kirin President and CEO, Kazuyasu Kato, said the move was in-line with their long-term strategy in the region.

“The proposal to acquire the shares in Lion Nathan we do not already own is a logical next step in achieving our long-term growth strategy of becoming a leading company in the areas of beverages, food and health across Asia and Oceania,” he advised. “After 11 years as the largest shareholder we have the utmost respect for the Lion Nathan management team and believe together we will grow the Lion Nathan business going forward.”

The deal continues Kirin’s push outside Japan, with their much publicised desire to double their revenue from overseas sources by 2015. Any further moves in Australia are unlikely in the near future given their speedy expansion in the region thanks to purchases of National Foods and Dairy Farmers in 2007 and 2008, respectively, although the company said Lion management would have a “mandate to continue to invest and grow KH’s presence in the region”.