Nomura Said Poised to Win Underwriter Job for Suntory IPO

Suntory Holdings Ltd. plans to hire Nomura Holdings Inc. (8604) as a lead underwriter for the initial public offering of its non-alcoholic drinks and food business, said two people with direct knowledge of the matter.

Closely held Suntory will submit a listing application for Suntory Beverage & Food Ltd. to the Tokyo Stock Exchange as soon as next month, said the people, who asked not to be identified before a decision. Suntory will seek to raise between 300 billion yen ($3.4 billion) and 500 billion yen, they said.

The deal would help Nomura recover from mandates lost last year including a lead role in Japan Airlines Co.’s $8.3 billion IPO, following revelations that brokerage staff tipped traders on share sales it managed. Suntory’s offering would be Japan’s biggest IPO since the airline’s sale and come after the Topix Index jumped more than 20 percent in the past three months.

“It will be a big global offering,” said Kazumi Tanaka, an IPO analyst at T&C Financial Research Inc. in Tokyo. “Nomura and other banks will be eager to get involved for fees and future advisory business as Suntory is keen on acquisitions.”

Shares of Nomura, Japan’s biggest brokerage, rose 2.2 percent to 511 yen as of 9:08 a.m. in Tokyo Stock Exchange trading. The stock more than doubled last year, compared with an 18 percent gain in the Topix.

Photographer: Kiyoshi Ota/Bloomberg

A man walks past a Suntory Beverage & Food Ltd. vending machine in Tokyo. Close

A man walks past a Suntory Beverage & Food Ltd. vending machine in Tokyo.

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Photographer: Kiyoshi Ota/Bloomberg

A man walks past a Suntory Beverage & Food Ltd. vending machine in Tokyo.

Naoko Tsuda, a Suntory spokeswoman in Tokyo, and Kenji Yamashita, a Nomura spokesman, declined to comment.

Acquisition Growth

Yasunori Aiba, who heads Suntory’s liquor business, said after a briefing yesterday that the parent company may list the beverage and food unit “around summer.” The listing’s timing will be decided by the Tokyo Stock Exchange, “and we are not in a position to talk about it,” he said, declining to comment further on the deal or its underwriters.

Suntory Beverage, with brands including Boss coffee and Orangina soda, may have a market value of 600 billion yen to 1 trillion yen, similar to beverage makers Kirin Holdings Co. (2503) and Asahi Group Holdings Ltd. (2502), the people said.

The maker of Yamazaki whisky and Premium Malt’s beer announced its plan to list its food and beverage unit on Dec. 18. It also said the subsidiary would set up a department on Jan. 1 to explore possible mergers and acquisitions.

Suntory has focused on overseas takeovers of non-alcoholic beverages, seeking growth abroad as population decline hinders demand in Japan. The Osaka-based company in 2009 bought France’s Orangina Schweppes Group for an undisclosed amount and paid 600 million euros ($785 million) the same year for New Zealand’s Frucor Beverages Group Ltd.

Nomura Redemption

Suntory Beverage, which employs about 15,000 people, is targeting sales of 2 trillion yen by 2020, its parent said last month. The unit posted sales of 970.6 billion yen in 2011, while Suntory had 1.8 trillion yen in total sales, according to a company statement.

Nomura’s Chief Executive Officer Koji Nagai, who took the post on Aug. 1, has promised to put an insider-trading scandal to rest that crimped the company’s investment banking business and prompted his predecessor to resign.

Daiwa Securities Group Inc. (8601), Japan’s second-largest brokerage, last year was hired as global coordinator for Japan Air’s IPO amid Nomura’s woes. Daiwa reaped 5.5 billion yen of revenue from the deal, including underwriting fees and retail broking, Chief Financial Officer Nobuyuki Iwamoto said in November.

Nomura’s brokerage commissions slid 16 percent to 72.3 billion yen for the three months ended Sept. 30 from a year earlier. Investment banking fees advanced 24 percent to 17.1 billion yen.

The firm was the top underwriter for Japan equity and equity-linked transactions last year with 44 share sales, including All Nippon Airways Co. (9202), according to data compiled by Bloomberg.

To contact the reporters on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net; Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net

To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net; Stephanie Wong at swong139@bloomberg.net

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