Kirin-Suntory Integration Talks Break Down

Tokyo, Feb. 8 (Jiji Press)--Kirin Holdings Co. <2503> and Suntory Holdings Ltd. said Monday that their business integration talks have broken down due to their failure to narrow the gap over the thorny issue of share swap ratio.

The Japanese beverage giants reached the conclusion at a meeting
between Kirin President Kazuyasu Kato and Suntory President Nobutada Saji.
Kirin said in a statement that the company "had been negotiating on
the premise that the new entity would be managed as a listed company in
order to ensure appropriate management independence and transparency."
"However, it became apparent that Suntory held a different view on
this matter," Kirin said.
At a news conference, Kato said that while the outcome of the talks
was regrettable, Kirin will accelerate efforts to achieve its medium-term
business goals.
Suntory's Saji said in a separate statement that the two companies
terminated their talks as they failed to bridge the gap over the share swap
ratio.
The business integration plan came to light in July last year and
has since drawn keen attention as a large-scale realignment move in the
Japanese business sector.
As the Japanese market is shrinking due to a downtrend of the
nation's population, the two companies were aiming to pursue economies of
scale and jointly explore overseas markets partly through business
acquisitions.
In late November last year, Kirin proposed a share swap ratio of
one to 0.5 in favor of the company, while Suntory, which has been calling
for the integration to be made on an equal footing, demanded a ratio of one
to 0.9.
Their negotiations hit a snag also because Suntory held on to its
request that its founding family, which owns about 90 pct of the firm's
outstanding shares, be allowed to take a stake of more than one-third in a
company to be created through the two firms' integration.
Kirin is listed on the first section of the Tokyo Stock Exchange,
while Suntory, held 89.3 pct by the founding family's asset management firm,
is not a publicly traded company.
Kirin, founded in 1907, posted group sales of some 2.3 trillion yen
and a net profit of 80.1 billion yen in 2008. It is capitalized at 102
billion yen and has a group workforce of 36,500.
In 2009, Kirin overtook Asahi Breweries Ltd. <2502> as the top
Japanese brewer for the first time in nine years in terms of domestic beer
and quasi-beer shipments.
Suntory, founded in 1899, earned sales of 1.5 trillion yen and a
net profit of 32 billion yen in 2008. The company has 70 billion yen capital
and a group workforce of 22,000.
Suntory has the top share in the Japanese whiskey market and ranks
third in the beer and quasi-beer market.