TOKYO (Reuters) – Japan’s Asahi Breweries (2502.T) said it was not in talks to buy soft drinks maker Orangina, denying a newspaper report it was competing with domestic rival Suntory Holdings in a $3.8 billion auction.
Private equity firms Blackstone (BX.N) and Lion Capital, which bought Orangina in 2006, are considering an approach from Asahi after an exclusive negotiation period with Suntory expired in August, the Financial Times reported.
Suntory, itself in talks to merge with bigger rival Kirin Holdings (2503.T), is still favoured to buy Orangina and a deal could be announced on Friday, the paper said.
“We are not in talks. We have not been in such talks. We are not even considering such a move. There is no truth in this report,” said Asahi spokesman Jin Yoshioka.
A source with direct knowledge of Asahi’s decision making said the firm is not interested in the acquisition “for now,” adding it is too expensive.
Suntory, known in Japan for its “Premium Malt’s” beer and “Boss” canned coffee, said on Thursday it was in talks to buy Orangina — best known for its orange-juice based soft drink sold in a distinctive bulb-shaped bottle.
The deal would be one of the biggest for a Japanese drinks firm, topping Kirin’s bid to buy the rest of Australian beer maker Lion Nathan (LNN.AX) for $2.8 billion, according to Thomson Reuters data.
Analysts said it was unlikely Suntory’s bid to buy Orangina, whose brands include Snapple and Oasis, was part of a defensive move linked to its own talks with Kirin. Still, the timing of Suntory’s approach puzzled some.
“The timing is a bit odd,” said Tomonobu Tsunoyama, food sector analyst at Tokai Tokyo Research Center.
A Suntory-Kirin merger, which would create a food and drinks giant with $41 billion in annual sales, could be completed as early as this year, according to Kirin.
Suntory’s founding family still controls the company, which was established in 1899, and its scion, Nobutada Saji, is the president.
A Kirin spokesman declined to comment on Suntory’s bid for the European drinks maker.
Tsunoyama said that although Suntory is financially well positioned for the Orangina acquisition, it may not fit Kirin’s mid-term strategy.
“Kirin has been building a business base in Asia and Oceania and it aims to achieve growth by focusing resources in these areas,” he said.
Orangina sold $2.2 billion worth of soft drinks in 2008, of which over 70 percent were sold in Western Europe, according to EuroMonitor International.
Japanese beverage firms have made a string of acquisitions in recent years to diversify their product line-ups and grow outside their sluggish domestic market.
They have bid against each other on a number of deals. For example, Asahi lost a bid to acquire Groupe Danone’s (DANO.PA) Frucor juice unit, which Suntory bought for $770 million late last year.
Asahi, the maker of “Super Dry” beer, is under pressure to build scale and diversify outside Japan after Kirin and Suntory began merger talks to create a beverage giant that would control half the country’s beer market.
Kirin shares fell 1.8 percent and Asahi lost 0.6 percent, while the benchmark Nikkei .N225 fell 0.9 percent.
A Suntory spokeswoman reiterated that it was in talks to buy Orangina, but nothing had been decided.
The FT said Merrill Lynch was advising Suntory. ($1=91.76 Yen) (Reporting by Taiga Uranaka; Editing by Dhara Ranasinghe)