Asahi to buy Australia's P&N Beverages for $322 million

TOKYO Thu Aug 26, 2010 7:17am EDT

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TOKYO (Reuters) - Japan's Asahi Breweries Ltd (2502.T) said on Thursday it will buy closely held fruit juice maker P&N Beverages for A$364 million ($322 million), making it Australia's second biggest soft drinks maker.

The acquisition of P&N from founder Robert Peter Brooks is aimed at bolstering Asahi's global beverage business, the Japanese company said in a statement.

Asahi President Naoki Izumiya told Reuters in an interview this month that the firm would have 800 billion yen ($9.5 billion) on tap for acquisitions over the next five years as it seeks growth outside its shrinking domestic market.

"Australia is a rare growth market among developed nations and the number of players is also few," Asahi President Naoki Izumiya said at a news briefing in Tokyo, explaining his decision to absorb P&N.

Japan's beverage market this year will decline by 1.5 percent, research firm Euromonitor predicts. That compares with 6.7 percent expansion in the rest of the Asia Pacific region, 0.9 percent in Australia and 2.7 percent for the world as a whole.

Among recent Australian deals, Asahi bought the local beverage business of Cadbury, Schweppes Australia, for 550 million pounds ($851.3 million) in April 2009.

AUSTRALIAN ASSETS

"It seems to me this deal is going to be a positive one for Asahi. Asahi says it's going to merge Schweppes and P&N and I see some consistent strategy in here," said Yoshiaki Yamaguchi, an analyst at SMBC Friend Research Center. "This acquisition is probably one of the best among other choices," he added.

Sources have also said Asahi is interested in the beer operations of Australia's No.1 brewer Foster's Group FGL.AX, but the potential hefty price tag of $10 billion would exceed what the Japanese company has put aside for M&A. SABMiller is the current favorite to buy the beermaker.

Asahi's main domestic rival, Kirin Holdings (2503.T), has also been busy snapping up assets in Australia.

Kirin paid $1.5 billion for Australia National Foods and Dairy Farmers and last year forked out $2.8 billion for control of the country's No. 2 beer maker, Lion Nathan.

Although Asahi has less money to spend than its bigger home rival, in soft drinks at least it is poised to overtake Kirin in Australia.

The combination of Asahi's soft drinks business there, which according to Euromonitor had an 8.7 percent market share by volume last year, with P&N's 7.3 share would push the Japanese company to No.2 in the non-alcoholic beverage market, ahead of Kirin with 8.9 percent and behind The Coca Cola Co (KO.N) with 34.8 percent.

Both Asahi and Kirin are in a race to gain enough scale to vie with their big global rivals such as Coca Cola. Asahi is aiming by the end of 2015 to boost overseas revenue to as much as 30 percent of the total sales.

Asahi plans to complete the purchase of the maker of Pop Tops, Pub Squash and Extra Juicy by the end of November, providing Australian regulators approve the deal.

Brokerage Rothschild Australia advised the Japanese brewer on the acquisition.

Asahi's shares gained 0.5 percent in Tokyo to 1,592 yen on Thursday. The company announced the acquisition after the stock market closed.

($1=84.59 Yen, 0.6460 Pound, 1.129 Australian Dollar)

(Additional reporting by Junko Fujita; Editing by Tim Kelly and Edmund Klamann)

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