Asahi Mulls Deal for U.S. Beverage Maker for Growth Abroad

  • Japanese brewer near $415 million bid for Talking Rain: Nikkei
  • The acquisition would be Asahi's largest overseas since 2011

Asahi Group Holdings Ltd. said it’s considering buying soft drinks company Talking Rain in what would be the first acquisition in the U.S. beverage market for Japan’s second-largest beverages maker.

The maker of Super Dry beer and Wilkinson ginger ale in Japan is close to an agreement to pay about 50 billion yen ($416 million) for closely held Talking Rain, the Nikkei newspaper reported Tuesday. No decision has been made, Asahi spokesman Takuo Soga said by phone. He declined to elaborate.

Preston, Washington-based Talking Rain sells fruit-flavored sparkling water, tea and lemonade in the U.S., where health-conscious consumers are shifting away from sodas. At the reported price, the deal would be Asahi’s largest overseas since the $1.3 billion acquisition of New Zealand-based Flavoured Beverages Group Holdings in 2011. Asahi has spent about $4.3 billion buying overseas beverage makers since 2004.

“They want to go overseas because they know domestic growth is difficult,” said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo. “It would be a pretty big purchase for them, and it could make sense if they are not paying too much for it.”

Beer Slump

Asahi is expanding overseas as it expects beer demand in Japan to slump about 1 percent a year with an aging and shrinking population. Revenue from outside Japan accounted for about 13 percent in 2014, up from zero in 2011. Sales this year will probably rise about 4 percent to 1.86 trillion yen, according to the average of 12 analyst estimates. That would be the slowest growth since 2011, when an earthquake, tsunami and nuclear disaster in Japan hurt consumption.

Talking Rain is privately owned and operated, according to its website. Real estate investors and builders Donald Kline and Donald Jasper bought the company along with Lawrence Hebner, a former stock broker, in 1987, Forbes reported in 2013. Kevin Klock, Talking Rain’s chief executive officer, declined to comment “on speculation and rumors” about the potential takeover by Asahi.

“We are continually working on our global expansion and our international distribution,” he said in an e-mail. “As a privately held company, in this competitive environment, we will not make any further comment.”

Small Gain

Asahi is exploring new capital tie-ups and isn’t the source for the Nikkei report about the Talking Rain deal, the company said in a statement Tuesday. The Japanese brewer rose 0.4 percent to 3,778 yen at the close in Tokyo trading Tuesday. The shares have gained 0.8 percent this year, compared with the 9.7 percent advance for the benchmark Topix index.

The company is also among the brewers and buyout firms such as KKR & Co. that are considering bids for SABMiller Plc’s European beer brands, people familiar with the matter said earlier in December. Bids are due in January, and deliberations are at an early stage, said the people.

Asahi’s cash and near cash stood at 58.3 billion yen as of Sept. 30, compared with 45 billion yen a year earlier, according to data compiled by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.