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Asahi Said in Talks to Buy Malaysian Pepsi Bottler Permanis

Asahi Group Holdings Ltd., Japan’s biggest beermaker by sales volume, is in talks to acquire Permanis Sdn., PepsiCo Inc.’s bottler in Malaysia, for about $200 million, a person with knowledge of the matter said.

Asahi is competing with another company to buy Permanis from Kuala Lumpur-based C.I. Holdings, said the person, who declined to be identified as discussions are private. A deal may be concluded within four to six weeks, the person said.

Japanese companies have accelerated investments abroad after production and power-supply disruptions following the nation’s strongest earthquake on record on March 11, Daiwa Institute of Research said last week. The country’s beverage makers are expanding overseas as a shrinking domestic population saps demand for their products.

Asahi President Naoki Izumiya said in February the company may spend 400 billion yen ($5 billion) on acquisitions this year. C.I. Holdings is led by Chief Executive Officer Erwin Selvarajah, who also runs Permanis, and makes taps, toilet bowls and showers in addition to its beverage business. Asahi spokesman Takayuki Tanaka declined to comment. Selvarajah didn’t return calls to his office seeking comment.

Asahi today said it agreed to buy the mineral-water and juice businesses of closely held P&N Beverages Australia Pty Ltd. for A$188 million ($203 million). The Tokyo-based company is also competing with domestic rival Suntory Holdings Ltd. to buy New Zealand’s Independent Liquor, the Wall Street Journal reported last month, saying the deal may be valued at $1.12 billion. Both brewers declined to comment on the report.

Sugar Subsidies

Increased competition and potential fluctuations in commodity-related costs are among challenges facing C.I. Holdings, the company said in its 2010 annual report. Last year, C.I. Holdings said it renewed its franchise bottling rights with PepsiCo for a 10-year term until June 2020.

In January, Permanis and other large beverage companies were told they were no longer eligible to buy subsidized sugar, resulting in a 38 percent increase in sugar costs, the New Straits Times reported in April. C.I. Holdings reported a 25 percent drop in profit for the fiscal third quarter ended March 31 on higher costs. The company’s stock has jumped 20 percent in the past month, trimming losses this year to 11 percent.

In 2000 and 2001, Permanis’s plant in Bangi, Selangor was voted by PepsiCo as the most efficiently operated Pepsi- affiliated plant in the world, according to the company’s website.

To contact the reporter on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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