Kirin Agrees to Buy Out Winemaking Unit Mercian for $132 Million in Shares
Kirin Holdings Co., Japan’s biggest beermaker, agreed to pay 11.1 billion yen ($132 million) in stock to take full control of wine unit Mercian Corp. and boost management after the affiliate misstated earnings last year.
Kirin will pay 0.14 of a share for each share it doesn’t already own in Mercian on Dec. 1, the two companies said in a joint statement today. That values Mercian at 12 percent more than yesterday’s closing price. Kirin bought half of the company, which also makes fish feed, for about 24.8 billion yen in 2006.
“Mercian’s management base and corporate governance urgently require reinforcement,” Kirin said in the statement. Mercian in June said it inflated earnings at its fish-feed division.
Kirin cut its full-year net income forecast by 27 percent this month, partly because of charges related to Mercian. The winemaker on Aug. 12 said it expects to have a net loss of 2.3 billion yen for the year ending December, reversing an earlier profit estimate of 800 million yen.
Mercian will decide by the end of the year whether to shut the fish-feed division, President Hiroshi Ueki said today at a press conference in Tokyo. Ueki agreed to take a 50 percent salary cut for three months to take responsibility for “improper” transactions, the statement said. Five executives and an auditor will also have their pay reduced.
Mitsubishi UFJ Morgan Stanley Securities Co. advised Kirin on the transaction, while Mercian appointed Frontier Management Inc.
Kirin fell 1.1 percent to 1,175 yen at the 3 p.m. close on the Tokyo Stock Exchange. Mercian, which will be delisted from the exchange on Nov. 26, rose 10 percent to 163 yen.
To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net
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