Lion Nathan has pulled out of the race for Independent Liquor after private equity groups bid up the price for the New Zealand spirits group.

The Trans-Tasman beer and wine group, long considered the front-runner for Independent, announced its withdrawal from the bidding today (11 December).

Reports in Australia said Independent is expected to fetch around NZ$1.13bn (US$776.6m). Private equity group CCMP Capital Asia and a consortium of Nikko Principal Investment and Pacific Equity Partners are understood to be battling it out for Independent, which could be sold for NZ$1.3bn, the reports added.

Lion chief executive Rob Murray admitted that Independent operates "with Lion Nathan's area of strategic focus". However, he said Lion could not justify a second, higher bid for Independent - although he refused to reveal the size of Lion's offer.

Murray said: "We undertook a rigorous valuation exercise on Independent's business operations and brands to determine what they were worth to our business, having regard to synergies and integration costs.

"Our focus is very much on adding value to Lion Nathan shareholders and our judgement was that an acquisition above our offer price would not achieve that."

Analysts had seen Independent as a key acquisition for Lion, which has been looking to bolster its presence in the RTD sector in Australia and New Zealand.

Independent, which was put up for sale after its founder Michael Erceg died last year, makes RTD brands including Vodka Cruiser and Mudshake.

However, Lion said it would continue with its plans to roll out Bourbon brand McKenna across Australia after a "successful launch" in Queensland this summer.