Kirin and Suntory scrap merger plans

02/08/2010 (5 h 17 m ago)

• Deal would have created world's fifth largest foodmaker • Japanese companies blame each other for failure of talks A deal to create a new powerhouse in the food and drink industry collapsed today after Japan's Kirin Holdings and Suntory Holdings abandoned their plan to merge. Kirin had hoped to become the world's fifth largest foodmaker, bigger than Coca-Cola, by taking over smaller rival Suntory. But after months of negotiations the two sides were unable to agree on the terms of the deal, or on how the combined company would operate. Kirin's alcoholic products include its eponymous beer. It also produces soft drinks and runs restaurant and engineering divisions. Suntory, which bought Orangina last November, sells whiskies , green tea and bottled water. It also distributes Häagen-Dazs icecream in Japan, and operates hundreds of restaurants and fast food outlets in Japan and overseas. The two companies have combined annual sales of $45bn (£29bn) and analysts had predicted that a merged entity would have been powerful enough to challenge the likes of Anheuser-Busch InBev. Both companies claimed today that they had ended the negotiations. Suntory said it had terminated discussions with Kirin because of disagreement over "integration ratio" – or how ownership of the merged company would have been divided up. Kirin, though, said the blame lay with Suntory – which is still mostly owned by descendants of its founder. "Kirin had been negotiating on the premise that the new entity would be managed as a listed company in order to ensure appropriate management independence and transparency. However, it became apparent that Suntory held a different view on this matter, and Kirin determined that even if negotiations were to continue, they were unlikely to result in the establishment of a company that would fulfil Kirin's aim of developing as a leading global company and earn the understanding and approval of Kirin's domestic and overseas customers, employees, shareholders and other stakeholders," said Kirin in a statement. Shares in Kirin fell by 7.35% today. There are concerns that Japanese food and drink makers need to focus on overseas expansion to address the impact of Japan's ageing and declining population. Food & drink industry Japan Graeme Wearden guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds

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