News

Analysis - Beer shares dive on Kirin, Suntory breakdown

Most popular

Can alcohol slow the onset of dementia? - analysis

What rum needs to do to recognise its potential

A-B InBev's Craft Brew Alliance purchase - Comment

How much should you drink to help you live longer?

Why single malt should ignore its core consumer

MORE

Analysts and investors have reacted badly to a breakdown in merger talks between Kirin Holdings and Suntory.

Kirin's shares price tumbled 7% on the Tokyo Stock Exchange today (8 February), after it announced an end to merger talks with Japanese drinks rival Suntory.

Both firms claimed to have terminated negotiations, seemingly mirroring the power tussle that has been played out behind the scenes over the last six months.

The root of the breakdown was disagreement over the makeup of the merged entity and the way it would be run. Kirin is a publicly listed company, while Suntory is a private enterprise with a different business ethos.

A breakdown in talks has been greeted as a negative for the whole Japanese drinks sector.

Shares in rival Asahi Breweries, which has played no part in negotiations, fell by more than 5% on the Tokyo Stock Exchange today.

"We see termination of the merger talks as negative not only for Kirin’s longer-term strategy but also for the brewing industry as a whole," said an analyst at Goldman Sachs in Tokyo.

"We would have expected the merger to result in lower sales promotion spend for the industry. The news can therefore also be seen as negative for Asahi Breweries."

The analyst added: "From a Kirin standpoint we think it is rational to opt for no merger rather than one with irrational conditions, but we see termination as negative for the medium to long term due to the substantial potential synergies."

Aside from potential synergies, it could be argued that only a combined company would have the clout necessary to compete with top multinationals in the beer sector and beyond.

Japan's major brewers are looking to expand outside of a domestic market in terminal decline. Market volume sales fell 2% in 2009, a record low for the fifth straight year, according to industry figures.

Bearing this in mind, a deal between Suntory and Kirin, or perhaps a combination of any of the major brewers, may not be dead.

//i2.aroq.com/1/japanese.jpg

Related Content

UK consumer confidence slumps as Brexit clock ticks on - survey

UK consumer confidence slumps as Brexit clock ticks on - survey...

Kirin set to offload Lion Dairy & Drinks

Kirin set to offload Lion Dairy & Drinks...

How did Beam Suntory and Suntory Holdings perform in 2018? - results data

How did Beam Suntory and Suntory Holdings perform in 2018? - results data...

Heineken’s H1 2019 results deliver

Heineken’s H1 2019 results deliver "negative surprises" - Analysis...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?