Asahi Buys Independent Liquor for $1.3 Billion in Record Overseas Takeover

Asahi Group Holdings Ltd. will buy New Zealand beverage maker Independent Liquor Ltd. for NZ$1.53 billion ($1.3 billion), the Japanese brewer’s biggest purchase, as it expands abroad to offset declining sales at home.

Asahi will finance the acquisition from Unitas Capital Pte. and Sydney-based Pacific Equity Partners with loans and cash, Atsushi Katsuki, Asahi’s external growth general manager, told reporters today in Tokyo.

Japanese beverage makers including Kirin Holdings Co., the country’s largest by market value, are pursuing overseas acquisitions as a shrinking population hurts demand for beer and soft drinks. Australia’s gross domestic product per capita is growing, and alcohol consumption has risen every year since 2005. SABMiller Plc yesterday went hostile on its $10 billion takeover bid for Australia’s Foster’s Group Ltd., the most profitable independent major beermaker.

“We can expect stable growth from Oceania, even though it may not be as big as China,” Asahi President Naoki Izumiya told reporters today in Tokyo. “Our next challenge will be to build up our network in Asia.”

The deal gives Asahi control of the world’s fourth-largest producer of bottled cocktails to help increase its portion of overseas sales from 7 percent, compared with Kirin’s 23 percent.

Vodka and Tequila

Independent’s products include Vodka Mudshake and tequila- based Crazy Mexican. It distributes brands including Woodstock bourbon, Whyte & Mackay scotch, and Carlsberg and Tuborg beers.

Asahi, Japan’s largest beermaker by volume, agreed last month to pay about $200 million for the water and juice business of Australia’s P&N Beverages and $309 million for New Zealand drink maker Charlie’s Group Ltd. (CHA) as it aims to boost revenue from outside Japan to at least 20 percent of its total by 2015.

Asahi “needs to come out with measures to create synergies with the companies it holds,” Hiroshi Saji, an analyst at Tokyo-based Mizuho Securities Co., said before the announcement. The deal may be the company’s last in the region for some time as it focuses on integrating the acquisitions, said Saji, who has an “outperform” rating on the stock.

Asahi rose 1.7 percent to 1,616 yen at the 3 p.m. close in Tokyo. The stock has gained 2.7 percent this year, compared with a 13 percent drop in the benchmark Nikkei 225 Stock Average.

It won’t bid for Foster’s, Australia’s biggest brewer, Izumiya said. “We’re looking at Foster’s with folded arms,” he said.

Super Dry

Asahi paid 14 times earnings before interest, taxes, depreciation and amortization, based on Independent Liquor earnings in today’s statement from the brewer and on a purchase price that will be adjusted for working capital, cash on hand, debt and time of completion. The multiple compares with an average of 9.47 for alcoholic beverages makers acquired over the past five years, Bloomberg data show.

SABMiller Plc. took its A$4.90 per-share offer for Foster’s directly to investors yesterday after the Melbourne-based brewer rejected its offer, saying it “significantly undervalues” the company.

Foster’s distributes Asahi’s Super Dry beer, its leading brand, in Australia, a relationship the Japanese company wants to maintain, Izumiya said.

Asahi expanded in Australia two years ago, buying Cadbury Plc.’s Schweppes Beverages business there for 550 million pounds, or $808 million at the transaction’s completion. The deal gave it the bottling rights to Pepsi and the country’s second-largest soft-drink operation.

Australia hasn’t had a recession since 1991 and last year ranked sixth worldwide in gross domestic product per capita, compared with a ranking of 22nd a decade earlier, according to International Monetary Fund figures.

Overseas Purchases

Asahi had also agreed to spend $274 million for Malaysia- based PepsiCo Inc. bottler Permanis Sdn.

Nomura Holdings Inc.’s securities unit and N M Rothschild & Sons are advising Asahi on the purchase of Independent, Katsuki said.

The acquisitions helped narrow Asahi’s gap with Kirin in terms of buying overseas rivals. Asahi has spent more than $2 billion abroad in the past five years, compared with Kirin’s more than $12 billion, according to data compiled by Bloomberg.

On Aug. 2, Kirin paid 3.95 billion reais ($2.5 billion) to gain a stake in Schincariol Participacoes e Representacoes SA, Brazil’s second-largest beermaker.

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

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

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