* To buy 100 pct of Independent Liquor from private equity
* Asahi aims to hike overseas sales to 2-2.5 trln yen by
* Japanese companies compete with foreign firms for deals
* Asahi president indicates more overseas deals likely
* Asahi shares rise 1.7 pct in broader market down 1.3 pct
By Mariko Katsumura and James Topham
TOKYO, Aug 18 Asahi Group Holdings is
acquiring New Zealand beverage group Independent Liquor for $1.3
billion, giving the Japanese brewing giant a ready-to-drink
cocktail maker to add to its stash of assets in the Oceania
Japanese brewers have been on an overseas spending spree,
mainly in Asia and Oceania due to their proximity and growth
prospects, as they look to make up for a contracting home
Overseas expansion is crucial to boost revenue growth as
Asahi, the maker of Japan's top-selling "Super Dry" beer,
struggles with a home beer market that shrank more than 15
percent in shipment volumes in the last decade.
In its biggest acquisition, Asahi said on Thursday it will
buy all outstanding shares of Flavoured Beverages Group, the
parent company of Independent Liquor known for its "Woodstock
Bourbon" and "Vodka Cruiser" brands, from private equity firms
Unitas and Pacific Equity Partners (PEP).
"With domestic demand weak, I have absolutely no
disagreement with Asahi's strategy of seeking growth overseas,"
said Shigeo Sugawara, senior investment manager at Sompo Japan
NipponKoa Asset Management.
"The real issue is whether or not Asahi will be able to
speed up profit growth at the companies it has bought and how
quickly it will see a return on its investment," he said.
Asahi aims to earn 6 percent of its sales from overseas
markets this year, which is below a target of 30 percent set by
rival Kirin Holdings . Asahi's forecast doesn't include
the recent slew of overseas deals.
Independent Liquor is New Zealand's top-ranked
ready-to-drink cocktail maker and is No.3 in Australia. Last
year, it had NZ$414 million ($348 mln) in revenue, but reported
a loss of NZ$23 million.
Excluding its purchase of Independent Liquor, Asahi has
spent nearly 225 billion yen ($2.9 billion) in the past five
years, snapping up targets including taking a stake in China's
Tsingtao Brewery and buying the Australia business of Schweppes.
Asahi's shares ended 1.7 percent higher after the
announcement of the deal, which had been widely flagged by media
reports in recent weeks, outperforming a 1.3 percent fall in the
benchmark Nikkei average .
Asahi has also announced plans to buy Permanis, the
Malaysian bottler for beverage giant PepsiCo , for about
$275 million and the mineral water and juice business of
Australia's P&N Beverages for about $200 million.
To help build its position in the Oceania region, the firm,
over a quarter owned by foreign investors, unveiled plans last
month to buy out New Zealand fruit juices and soft drinks
producer Charlie's Group .
Asia has seen a spate of deals in recent months.
Diageo has won Chinese approval to take control of
Sichuan Swellfun , China's fourth-largest premium
white spirits. On Thursday, Australian brewer Foster's
rejected a $10 billion offer from rival SABMiller for
the second time as shareholders hold out for a better offer.
At a news briefing, Asahi President Naoki Izumiya told
reporters his company would now focus on building its Southeast
Asian network, but acknowledged the company needs to look
"There is obviously a limit to expansion in Southeast Asia,
and Asia as a whole, and if we only do it in Asia, it will not
be enough to meet our goals," Izumiya said.
He was referring to Asahi's target to boost annual group
revenue to 2-2.5 trillion yen by the end of 2015, up from around
1.5 trillion yen last year, with a goal of an overseas sales
ratio of more than 20 percent.
"So our first consideration is seeing what more can be done
in China, Asia and Oceania, but after that, we will of course
need to make efforts to consider good offers available outside
of those areas," Izumiya said.
With only a few targets available in the region, Japanese
brewers have been shifting their focus outside of Asia.
This month, Kirin spent $2.6 billion to take a controlling
stake in Brazilian beer and soft drinks maker Schincariol, in
its first entry into the fast-growing South American economy.
In an interview last month, the overseas head at rival
Sapporo Holdings said the beer maker was expanding its
scope of its potential targets as it seeks to build up its North
Independent Liquor earns more than 90 percent of its sales
from Australia and New Zealand, but is eyeing an expansion into
the United States and China.
The purchase of Independent Liquor will be financed with
cash on hand and through loans, President Izumiya said.
Nomura Holdings and Rothschild are
advising Asahi, which aims to complete the Independent Liquor
deal by September. UBS AG is the financial adviser for
PEP and Unitas.
Private equity firms Unitas and PEP acquired Independent
Liquor in 2006 for more than $1 billion, and China's Bright Food
Group has been among the list of possible buyers, sources had
Unitas is a buyout group formerly known as CCMP. That group
spun out of J.P. Morgan when the bank decided to hive off its
private equity arm. PEP is a buyout fund focused on investments
in Australia and New Zealand.
($1 = 1.190 New Zealand Dollars)
($1 = 76.565 Japanese Yen)
(Additional reporting by Mayumi Negishi, Emi Emoto and Yuka
Obayashi; Editing by Nathan Layne and Anshuman Daga)