* Prices IPO at Y3,100/share vs range of Y3,000-Y3,800
* Values IPO at $4 bln, largest in Asia so far this year
* Price values Suntory PE ratio at higher than peers
(Recasts with price announcement)
By Taiga Uranaka and Ritsuko Shimizu
TOKYO, June 24 Japan's Suntory Beverage and Food
Ltd will raise 388 billion yen ($4 billion) after it set its IPO
price near the bottom of its marketing range, hurt by concerns
about its valuation and weak appetite amid market volatility.
The food and soft drinks unit of Suntory Holdings Ltd set
the price of its initial public offering at 3,100 yen per share,
compared with its 3,000-3,800 yen indicative range, it said in a
regulatory filing on Monday.
The maker of Boss canned coffee had been seeking as much as
470 billion yen in Asia's biggest IPO so far this year, to
bolster its war chest for acquisitions in emerging markets like
Southeast Asia and boost its competitiveness against rivals like
Kirin Holdings Co Ltd.
"It's obviously a sign that the stock is not popular among
institutional investors," said a hedge fund manager based in
Singapore, who was not authorised to discuss the matter
"Given its valuation compared with its peers and high
volatility in the market, I think even the price of 3,100 yen is
too high for many institutional investors," he said.
The IPO price values Suntory Beverage at a price-to-earnings
ratio of 23 based on its 2013 profit forecast. That is higher
than 17 at domestic rival Asahi Group Holdings and 16
at Kirin, according to Thomson Reuters data.
At the IPO price, Suntory Beverage would have a market
capitalisation of 958 billion yen, behind Kirin's 1.5 trillion
yen and Asahi's 1.2 trillion yen.
Suntory Beverage's IPO was also seen as a test of investor
appetite for new listings at a time of high volatility in
Japanese stock markets. The benchmark Nikkei has lost
about 18 percent since hitting a 5-1/2 year high in late May.
Still, the offering is almost twice the size of the $2.1
billion IPO by the infrastructure fund of Thailand's BTS Group
Holdings Pcl, the second-biggest Asia IPO this year,
and provides Suntory with the funds to ramp up its acquisition
Privately held Suntory Holdings is led by President Nobutada
Saji, the 67-year-old grandson of the company's founder. The
group, which is known for its Premium Malt's beer and whisky,
gets half of its revenue from non-alcoholic drinks unit Suntory
Suntory Beverage said it expects its net profit to rise 50
percent to 35 billion yen and its revenue to increase 14 percent
to 1.13 trillion yen this year. It has set a target for annual
revenue growth of at least 5 percent over the next three years.
In Japan, Suntory is the second-largest soft drinks maker
after Coca-Cola Co and the gap in their market share has
been narrowing. "In terms of domestic share, Coca-Cola is 27.9
percent and Suntory 19.6 percent. The gap used to be much
bigger," said Kazuhiro Miyashita, editor of a trade magazine.
Still, Suntory and its rivals see little room for growth in
their saturated home market and have set their sights overseas
in recent years.
Suntory acquired soft drinks maker Orangina Schweppes and
New Zealand's No. 2 beverage firm Funcor Group, both in 2009. In
2011, it entered into a joint venture with Indonesian food and
beverage group GarudaFood. Suntory has said that it is also
eyeing the Middle East, Africa and Latin America through
But industry officials and analysts say that acquisitions,
especially in Southeast Asia, are increasingly costly and
difficult to execute.
Such concerns came to light earlier this year when Kirin
lost the chance to buy Singapore-listed Fraser and Neave Ltd's
(F&N) food and beverage business after Thailand's TCC
Assets Ltd and Thai Beverage PCL successfully acquired
the control of F&N.
Kirin sold its 15 percent stake in F&N to TCC Assets after a
Thai beer baron won a two-month bidding war with an Indonesian
group, a major setback for the Japanese company to gain quick
access to the market.
"There are a host of enthusiastic buyers, and sellers tend
to be bullish," Masaaki Kitami, an analyst at Merrill Lynch
Japan Securities Co, said of the intensifying competition for
beverage-company acquisitions in that region.
($1 = 97.4750 Japanese yen)
(Additional reporting by Emi Emoto and Nathan Layne; Editing by