Kirin, Suntory cancel merger talks

Feb 8, 2010, 11:38 GMT

Tokyo - Major Japanese brewers Kirin Holdings and Suntory Holdings said Monday they cancelled merger talks that would have created one of the world's largest food and beverage companies.

The breakdown of the talks was attributed to differences over the merger ratio, the two companies said.

'The biggest reason (for the collapse) was the failure to reach a common understanding on how to manage the new merged entity on the premise that it would be a listed, public firm,' Kirin president Kazuyasu Kato told a news conference Monday.

Suntory is not a listed enterprise. The asset management company of its founding family owns about 90 per cent of Suntory shares.

'We will continue working on our major challenge to become one of the world's foremost comprehensive alcoholic beverage and food companies,' Suntory president Nobutada Saji said in a statement.

Members of the family had insisted on owning a combined stake of more than 33.3 per cent in the new company, which would have given them the ability to veto any major management decisions, Kyodo News said, citing unnamed sources familiar with the talks.

Kato denied that the stake to be owned by the family was the key cause of the merger's collapse.

The combined company, with an estimated revenue of around 3.8 trillion yen (42.5 billion dollars), could have controlled up to half of Japan's beer market and about one-third of its soft-drink market, which had raised antitrust questions.

The news of the talks' collapse sent Kirin shares plunging more than 8 per cent at one point during Monday's trading in Tokyo. At the close of the trading, the share price was down 7.35 per cent at 1,337 yen.

Kirin 'tried to continue our negotiations as much as possible in view of the huge role the merger would play for our company to survive global competition,' Kato said.

Kirin overtook Asahi Breweries as Japan's largest brewer last year. Kato said it would continue to seek merger and acquisition deals as part of a growth strategy to expand its presence abroad.