Kirin gains Lion directors' support for takeover at 47% premium

Monday 27th April 2009

Kirin Holdings, Japan’s largest beverage company, agreed to acquire the remaining shares Australian brewer Lion Nathan for a 47% premium, winning support from the target company’s independent directors.

The offer is A$12.22 a share, comprising of A$11.50 cash and a fully franked special dividend from Lion of 72 cents a share.

The offer 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.

The shares are set to soar on the ASX today, coming off trading halted having last changed hands 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.

“We believe this is a very attractive outcome for Lion Nathan’s non-Kirin shareholders,” chairman Geoff Ricketts said in the statement. “It is a compelling offer at a significant premium to Lion Nathan’s share price.”

The independent directors will recommend the offer to shareholders in the absence of a superior offer and subject to an independent assessment.

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. Kirin also plans to acquire up to 49% of the Philippines’ San Miguel Brewery, the biggest food and drinks company in Southeast Asia.

San Miguel this month posted an 8% gain in first-quarter profit. At the same time Kirin it exiting France’s Pernod Ricard, the world’s second-largest liquor group, agreeing to sell its3.74% stake to founding investors the Ricard family.

Lion’s own expansion plans have been 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.”

Last month, Fitch Ratings raised Lion’s long-term credit rating to BBB+ from BBB, saying the upgrade reflected “the strong strategic ties between Lion and Kirin” and the strength of Lion’s underlying business profile

Businesswire.co.nz

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