The news this week that Suntory has launched a binding offer to acquire Orangina Schweppes is another sign of the growing international aspirations of Japan's drinks groups. Alongside the mooted merger with rival Kirin, it is also a clear indication of Suntory's intention to be at the forefront of that trend.

The logic behind the expansion abroad is compelling. Japan's domestic drinks industry has stagnated through a combination of rising taxes and slowing consumer demand on top of an ageing population.

The Orangina deal will allow Suntory to further develop its overseas business, by adding a range of well-known brands to its largely domestic portfolio. And it shores up the company's European operations, whose revenues fell 29% to JPY9.2bn in 2008, accounting for 0.6% of total revenue of JPY1.5tn, with a range of brands that have strong positions in local European markets.

The deal also brings with it a valuable route to market for Suntory's Japanese branded green teas and health drinks to a Western European audience that increasingly craves new experiences and and exotic brands. Whether, of course, the cultural differences between Japan and Europe make many of these beverages a step too far for European consumers remains to be seen.

All that said, the price being mooted for the deal, said to be in the region of of EUR2.6bn (US$3.8bn), seems steep. It is at a considerable premium to the price current owners Lion Capital and The Blackstone Group paid for it in early 2006 (EUR1.85bn) at the height of the private equity boom.

If Suntory has been unimpressed with the performance of its domestic market for soft drinks in recent years, it is very unlikely to get over-excited by the mature markets of France, Spain and the UK where Orangina has its core business. This, remember, is a drinks business that both Pernod Ricard and Cadbury walked away from.

The deal may also put added strain on its attempts to merge with rival Japanese group Kirin. The purchase has the potential to saddle Suntory with debt but also gives it an overseas arm that seems to jar with Kirin's efforts to concentrate its expansion efforts on Asia.

Therefore, it risks making the integration of Kirin and Suntory a far more complicated prospect.

The deal “would eat up much of the firepower of a merged Kirin-Suntory entity,” Frederic Gits, a senior director in Fitch’s Asia Pacific Corporates Group, said in a TV interview last week. “It’s not obvious how it would benefit the Kirin-Suntory group.”