Suntory’s Saji Says IPO Is Option to Raise Funds (Update1)

Feb. 9 (Bloomberg) -- Suntory Holdings Ltd., the Japanese beverage maker that yesterday ended merger talks with Kirin Holdings Co., said an initial public offering is an option to fund its expansion.

“When we need funds for acquisitions, we’ll consider selling shares,” President Nobutada Saji said at a press conference in Tokyo today.

Kirin ended talks to buy Suntory after balking at the $10 billion asking price. Saji and other members of Suntory’s 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 takeovers and other major decisions.

Suntory and other Japanese beverage makers have been expanding overseas to reduce their reliance on a population that’s forecast to shrink 10 percent by 2030. The Osaka-based company purchased European drinkmaker Orangina Schweppes in November for an undisclosed sum, and Groupe Danone SA’s Australia and New Zealand drinks business Frucor for more than 600 million euros ($822 million) in 2008.

The Kirin takeover of Suntory would have created the world’s fifth-biggest foodmaker. Kirin wasn’t able to gain “appropriate management independence,” according to its statement yesterday.

Suntory wanted about 0.9 percent of a share for each Kirin share in the proposed new holding company formed after the merger, according to a Suntory executive, who declined to provide his name. That would have valued Suntory at 892 billion yen ($10 billion) based on Kirin’s closing price last week.

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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.

Saji and other members of the founding family own about 89 percent of Suntory. Saji’s grandfather, Shinjiro Torii, started the company in 1899 and began building Japan’s first whiskey distillery in Osaka prefecture in 1923.

The company makes Suntory whiskey, Malt’s beer and Boss canned coffee brands.

Suntory today forecast its 2010 profit to rise 23 percent to 40 billion yen in 12 months ending Dec. 31. Sales may rise 12 percent to 1.74 trillion yen, helped by last year’s acquisition of Orangina Schweppes.

Kirin rose 1.7 percent to 1,360 yen as of 2:30 p.m. on the Tokyo Stock Exchange. The stock slumped 7.4 percent yesterday, the most in 15 months, after Kirin and Suntory said they terminated merger talks.

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Shunichi Ozasa in Tokyo at sozasa@bloomberg.net.