Lion, Kirin still in talks

Monday 4th May 2009

Kirin Holdings, Japan’s largest beverage company, is still in talks with Lion Nathan over its acquisition of the remaining shares in the Australian brewer.

“Lion Nathan currently expects that an implementation agreement will be agreed and executed over the course of the next week,” the brewer said in a statement today. The two companies have to settle “detailed terms of a mutually satisfactory IA” that “reflect the key commercial terms outlined in Lion Nathan’s announcement on 27 April 2009.”

Kirin has agreed to pay A$12.22 a share, comprising of A$11.50 cash and a fully franked special dividend from Lion of 72 cents a share, a 47% premium to its trading price before the offer. Kirin’s proposal values Lion Nathan at A$6.5 billion and represents a multiple of 3.8 times 2008 EBITDA of A$592 million, or 12.5 times estimated EBITDA.

Lion’s ASX-listed shares have soared 41% in the past week and were last at A$11.74. Before the offer was announced, they were trading at A$8.31 apiece. The transaction will be by way of a scheme of arrangement and subject to voting by non-Kirin shareholders. Kirin owns 46.1% of Lion currently.

Lion, whose brands include Steinlager, Lion Red, Speight’s, Macs, XXXX, Tooheys, Becks and Hahn beers, St Hallett and Petaluma wines and McKenna bourbon, dominates the Australian market with rival Foster’s Brewing Group. That offers the prospects of fatter margins for Kirin, whose home market is shrinking, driving it to seek opportunities offshore.

Lion’s own expansion plans were thwarted this year. In February, it dropped a takeover offer for Coca Cola Amatil and reiterated its forecast for full-year net operating profit of A$300 million to A$315 million, saying its business is in “robust shape.”

Businesswire.co.nz

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