Kirin/Suntory merger collapses

A proposed merger between Japanese beer giant Kirin Holdings and rival Suntory has collapsed amid disagreements over who would run the combined company.

The merger would have created one of the world’s biggest food and beverage firms.

After eight months of negotiations, which were at their final stages, the deal broke down today (Monday, 8 February) after the two companies could not agree an acquisition ratio, which would have effectively determined which side would control the new entity.

The two companies appear to be at loggerheads over who is to blame for the collapse in negotiations, with Suntory, which is still 90% owned by its founding family, saying discussions had been terminated due to disagreements over the “integration ratio”, which dictates how management of the company would be divided up.

However, a Kirin statement said: "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.”

Kirin president Kazuyasu Kato told a news conference on Monday: “The biggest reason (for the collapse) was the failure to reach a common understanding on how to manage the new merged entity on the premise that it would be a listed, public firm.”

Alan Lodge, 08.02.2010