Suntory Climbs on Debut After $4 Billion Soft Drink IPO

Suntory Beverage & Food Ltd. gained on its Tokyo trading debut after raising almost $4 billion in Asia’s largest public offering this year.

The soft-drinks unit of Osaka-based Suntory Holdings Ltd. closed 1.5 percent higher at 3,145 yen after rising as much as 3.1 percent to 3,195 yen. The benchmark Topix index gained 0.2 percent.

The seller of Orangina soda and Boss coffee last week priced its shares near the low end of a projected range after volatile markets curbed demand. The company aims to double sales to 2 trillion yen by 2020 as it expands overseas.

“There is always uncertainty in supply and demand when there are big IPOs, but investors are paying more and more attention to stocks with good business performance such as Suntory Beverage,” said Yoshihiro Ito, chief strategist at Okasan Online Securities Co.

Suntory Beverage expects net income to rise 50 percent to 35 billion yen this year.

Overseas Acquisitions

Suntory last week set the final price for the IPO near the lower end of an earlier indicative range of 3,000-3,800 yen.

The listing on the first section of the Tokyo Stock Exchange is the country’s biggest share sale since Japan Airlines Co.’s IPO raised 663 billion yen in September last year.

Recent market volatility has overshadowed the comparative health of Japan’s drinks industry. The Topix index, a gauge of the stocks listed on Tokyo’s first section, has fallen more than 8 percent from this year’s peak of 1,276.03 on May 22.

The index had risen more than 70 percent from mid-November to May 22 on optimism about Prime Minister Shinzo Abe’s measures to revitalize the world’s third-biggest economy. The Topix yesterday capped the biggest four-day rally since April as the yen weakened.

Volatile Conditions

The IPO was more than three times oversubscribed by domestic investors and almost two times oversubscribed by those from overseas, Tetsuo Ichimoto, a spokesman for Suntory Beverage, has said. Suntory Beverage President Nobuhiro Torii plans to use proceeds from the share sale partly to continue to expand through overseas acquisitions.

Of the 2 trillion yen in sales targeted by 2020, about 1.5 to 1.6 trillion yen will come from existing businesses with the rest achieved through “strategic investment,” or deals, Torii said at a press conference today.

The beverage group bought France-based Orangina Schweppes Group for 300 billion yen in 2009 and paid 600 million euros in the same year for New Zealand’s Frucor Beverages Group Ltd.

Suntory Beverage plans to acquire companies in Southeast Asia, Middle East, Africa, and Latin America, it said in December.

Suntory had a 20 percent market share in Japan’s non-alcoholic drink market in 2012, the second biggest after Coca-Cola Co.’s 28 percent, according to researcher Inryosoken.

The company is known for its motto ‘Yatteminahare’ or “go for it,” the slogan created by its founder.

Actor Bill Murray’s character in the 2003 film ’Lost in Translation’ introduced the name to international filmgoers with the line, “For relaxing times, make it Suntory time.”

Parent Suntory Holdings, which sells whiskey and beer, will remain unlisted. Nomura Holdings Inc., Morgan Stanley and JPMorgan Chase & Co. were selected to manage Suntory Beverage’s listing, the company has said.