Kirin Says Interested in Raising San Miguel Brewery Stake

Kirin Holdings Co. (2503), Japan’s biggest beverage maker that reported a slowdown in sales, said it’s interested in raising its stake in San Miguel Brewery Inc.

Kirin, which holds about 48 percent of the Philippine beermaker, would weigh boosting its stake in the brewer if offered, President Senji Miyake said at a press conference in Tokyo yesterday, without elaborating. San Miguel Corp. (SMC) owns 51 percent of the beermaker.

Ramon Ang, the billionaire chief of San Miguel, said last month he’s received several bids of as much as $6 billion for its 51 percent stake in the brewery unit, and that Kirin hasn’t offered to buy the remaining stake. The Japanese company’s show of interest comes amid its forecast for profit this year that misses analysts’ estimates as sales expand at a slower pace.

San Miguel “is the essential part of Kirin’s Asia strategy,” said Mikihiko Yamato, deputy head of research at JI Asia in Tokyo. “Kirin should certainly have the majority stake as San Miguel has a massive market share in the Philippines.”

Ang couldn’t immediately be reached on his mobile phone for comment.

Kirin fell 0.3 percent to 1,424 yen at the close in Tokyo trading, before the announcement. The stock has declined 5.9 percent this year, compared with the 11 percent drop in the benchmark Nikkei-225 Stock Average.

Pharmaceuticals

Kirin’s net income will probably fall 43 percent to 49 billion yen ($480 million) this year, Kirin said in a statement yesterday. That compares with the 61.9 billion yen average of 13 analysts’ estimates compiled by Bloomberg. Sales may climb 1.6 percent to 2.29 trillion yen, the company projected.

The 2014 profit forecast trailed analysts’ estimates because the government’s plan to cut drug prices this year wasn’t fully factored into market expectations, Yamato said.

Operating profit at the medical and biochemical business, which accounted for 15 percent of group sales in 2013, will fall 19 percent to 44 billion yen this year because of the lower prices, Kirin said in a statement.

Net income rose 52 percent to 85.7 billion yen, while sales rose 3 percent to 2.25 trillion yen in the year ended December, the company said.

Kirin is exploring ways to increase overseas sales as it tries to decrease its dependence on the shrinking domestic market due to a falling population. The company lost a foothold in Southeast Asia after it sold its stake in Singapore-based beverage maker Fraser & Neave Ltd. to Thai billionaire Charoen Sirivadhanabhakdi last year.

Domestic shipments of regular, low-malt and alternative beers dropped 1 percent in 2013, a record low for nine straight years, according to announcements from Japanese beer makers in January.

To contact the reporter on this story: Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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