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Suntory lines up Japan Tobacco beverage unit US$1.2bn

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Suntory Holdings has agreed to pay JPY150bn (US$1.2bn) for Japan Tobacco's (JT) beverage business, including coffee brand Roots and flavoured water Momono Tennen-sui.

Suntory will have access to JTs vending machine business

Suntory will have access to JT's vending machine business

The deal, which also includes JT's Japanese vending machine unit, is expected to complete in July, Suntory said yesterday. The businesses will be merged into Suntory's drinks and snacks division, Suntory Beverage & Food.

The company yesterday hailed the acquisition for giving it access to JT's vending machine distribution, which will help provide "full-line beverage service at locations that are closer to consumers". According to Suntory, the EV/EBITDA multiple is ten to 11 times.

JT, which mainly produces cigarettes but entered the beverage market in 1998, put its beverage unit up for sale in February citing increased competition in the category. The firm launched Roots in 2000 as it looked to off-set declining cigarette sales.

Suntory has made a number of acquisitions in the past two years as it faces declining beverage sales in its home market. Last year, the company paid US$16bn for the US-based Beam Inc, and also purchased the Lucozade and Ribena brands from the UK's GlaxoSmithKline.


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