Kirin admits to merger discussions with Suntory

Posted by Daniel Palmer on 15th July 2009

Kirin Holdings has announced that it is discussing the prospect of a $51 billion merger with Suntory that would create the world’s fifth largest food and beverage firm and potentially shake-up the beverage sector in Australia.

In their statement to the market yesterday Kirin stressed the Suntory discussions were at an “initial stage”.

“Nothing has been resolved or reached an agreement at this stage,” they advised. “Kirin will make immediate announcement once anything which needs to be disclosed will be resolved.”

The Japanese brewing giant has made a host of acquisitions in recent years as they look beyond their stagnant home market of Japan. This has seen them make three acquisitions in Australia, with the purchase of National Foods in 2007 followed by Dairy Farmers in 2008 and Australia’s second largest brewer – Lion Nathan – this year*.

Suntory, too, has been keen to extend their reach beyond the shores of Japan, with this year’s purchase of Frucor a signal of their growth intentions. With both now having interests in Australia, the deal could have major ramifications down under. Adding to this is the prospect that Kirin’s main rival – Asahi – could make a bid for Foster’s to shore up their position in Australia following their Schweppes purchase. Rumours of an Asahi bid have been swirling for months but no firm interest has ever been declared.
If Asahi made a play for Foster’s then the beverage landscape in Australia would be vastly different to that seen just three years ago, leaving Coca-Cola Amatil as the only major Australian-owned beverage firm in the region. Intriguingly, Amatil’s share price has surged 4.4% since rumours of the Suntory-Kirin tie-up, perhaps on the hope that the consolidation will lead to another bid for the maker of Coca-Cola in Australia. Kirin made an offer last year via Lion Nathan that was rebuked by Amatil and major shareholder The Coca-Cola Company.

* Still requires shareholder approval.