Kirin purchase of Brazil brewer meets opposition

TOKYO (AP) - A $2.53 billion bid by Japan's Kirin Holdings Co. for a controlling stake in Brazilian brewer Schincariol Group is failing to win over investors in either company.

Schincariol minority shareholders have vowed to block the sale in an apparent family feud over the fate of the company, and investors in Japan appear to worry the bid may be too expensive for the Japanese drinks company.

The purchase ranks as one of the largest overseas takeovers by a Japanese company this year and is part of Kirin's efforts to find new growth overseas to offset a shrinking population at home. Brazil's large beverage market is expected to grow rapidly along with the country's economy.

Kirin's shares fell almost 5 percent in trading Wednesday on the Tokyo Stock Exchange amid questions about the high price. The stock performed worse than the benchmark Nikkei 225 index, which dropped 2.2 percent.

Kirin's move highlights an aggressive global shopping spree this year by Japanese companies seeking to benefit from a strong yen, which makes overseas deals more affordable, and abundant cash. The March 11 earthquake and tsunami added to their drive to secure new business outside of Japan.

Data from Dealogic shows that the value of overseas takeovers and acquisitions by Japanese firms so far in 2011 is up 110 percent from a year earlier to $46.7 billion.

Kirin's latest purchase is the third-biggest Japanese overseas deal this year and the second-biggest Japanese acquisition in Latin America on record, according to Dealogic. It follows Takeda Pharmaceutical's $13.7 billion purchase of Switzerland's Nycomed and Terumo Corp.'s $2.6 billion takeover of Colorado-based CaridianBCT Holding Corp. earlier this year.

Under Tuesday's deal worth 3.95 billion Brazilian reals, Kirin acquired all outstanding shares of Aleadri-Schinni Participacoes e Representacoes S.A., which holds 50.45 percent of Schincariol and is controlled by Alexandre Schincariol and Adriano Schincariol.

But Schincariol minority shareholders led by Gilberto, Daniela and Jose Augusto Schincariol oppose the sale and said they would block it.

In a joint statement, they said that "for the purpose of defending the interests of the employees, suppliers and Brazilian consumers," they "do not recognize the legitimacy of any transaction involving share transfers to third parties" such as Kirin.

"The legislation and the bylaws of Schincariol are clear. None of the parties may offer their shares to third parties before abiding by the right of first offer and right of first refusal to which shareholders are entitled to," the statement read.

It added that any attempt to infringe on those rights would be subject to a legal challenge.

Schincariol's press office said the company had no comment.

With Schincariol, Kirin gains a foothold into South America's biggest economy, where the beer and soft drink markets are worth an estimated 3 trillion yen ($38.8 billion) each.

Earlier media reports indicated that rivals SABMiller and Heineken also wanted to buy Schincariol and had each submitted bids. Neither could match Kirin's offer, which Barclays Capital described as a "more than full" price.

"Given today's hefty final price tag, we are relieved that the European brewers decided to walk away," said Barclays Capital analyst Simon Hales in a research note.

Schincariol is the second-largest beer producer in Brazil, known for brands such as Nova Schin, Devassa and Bem Loura. It also ranks third in the country's carbonated soft-drinks market.

It owns 13 factories and a nationwide distribution network in Brazil, Kirin said in a statement.

The acquisition provides Kirin "a solid base in the fast-growing Brazilian market in addition to the existing base in the Asia and Oceana regions," the company said.

The company aims to generate 30 percent of its sales and profits from outside Japan by 2015. In 2009, it bought full control of major Australian brewer Lion Nathan Ltd. and almost half of San Miguel Brewery Inc. of the Philippines.

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