Suntory Beverage to Study Targets With $4.9 Billion for Deals

Suntory Beverage & Food Ltd. will start internal discussion on acquisition targets as early as September as it prepares to spend up to 500 billion yen ($4.9 billion) after Asia’s biggest initial public offering this year.

The company’s five-member mergers-and-acquisitions team, led by a former Bank of America Corp. banker, will begin discussing more than 100 targets with its board members, Nobuhiro Torii, the company’s chief executive officer and president, said in an interview in Tokyo yesterday.

“The specific areas we are looking for is emerging markets,” Torii said. “One important thing we have to look at is the capability of distribution or distribution platforms. Without reaching points of sale, we cannot deliver our products.”

Suntory Beverage, which started trading on July 3 after raising almost $4 billion in its public offering, gained 3.1 percent to 3,375 yen in Tokyo trading yesterday. That’s 8.9 percent higher than the IPO price of 3,100 yen.

The drinks and food unit of Suntory Holdings Ltd. is targeting 200 billion yen of operating profit by 2020, more than triple the current level, he said. Torii and other executives at the company plan to buy the company’s shares this year, the 47-year-old executive said.

Share Purchase

“I already finished the application for the cumulative stock investment program, buying as many shares as possible periodically with a fixed amount of money,” Torii said. “I told our executives we should purchase the shares even little by little. We have to manage the company with the share price in mind.”

The Tokyo-based company in March hired Haruhisa Inada, a former co-head of the investment banking division at Merrill Lynch Japan Securities Co., a unit of Bank of America, to lead the M&A team it set up in January, Torii said.

The seller of Orangina soda and Boss coffee plans to double sales to 2 trillion yen by 2020 partly through acquisitions.

Closely held Suntory Holdings 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 expects sales to rise 14 percent to 1.13 trillion yen for the year ending December. Net income will probably rise 50 percent to 35 billion yen.

Suntory priced its IPO near the lower end of its range of 3,000-3,800 yen as market volatility curbed demand for new offerings. The listing on the Tokyo Stock Exchange was the country’s biggest share sale since Japan Airlines Co.’s IPO raised 663 billion yen in September last year.

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.” Suntory Holdings, which sells whiskey and beer, holds about 60 percent of the listed unit.