$1.5b and the drinks are on Asahi

NZ Herald

18 Aug, 2011 05:30 PM3 mins to read

Japanese brewing giant Asahi has confirmed it will spend another $1.5 billion buying Papakura-based Independent Liquor. Photo / Supplied

Unsatisfied with its $129.3 million takeover of NZX-listed juice maker Charlie's, Japanese brewing giant Asahi has confirmed it will spend another $1.5 billion buying Papakura-based Independent Liquor.

One industry source described the price as "staggering", but did not expect the acquisition to change the dynamics of this country's liquor industry.

But the purchase does mean the transtasman alcohol firm, founded in Auckland in 1987 and best known for its RTDs (ready-to-drink alcoholic beverages), will lose the last vestiges of its New Zealand ownership.

It will also consolidate the dominance of overseas - particularly Asian - companies in this country's liquor industry.

Newmarket-based brewing firm Lion is owned by Japan's Kirin Holdings, while DB Breweries belongs to Singapore-listed Asia Pacific Breweries, which is part-owned by Dutch beer maker Heineken.

Both Lion and DB declined to comment on Asahi's upcoming acquisition of Independent yesterday.

Australia's Pacific Equity Partners (PEP) and Asian private equity firm Unitas Capital currently own 88 per cent of the company, and paid $1.26 billion for their shareholdings in 2006.

Their investment made Lynne Erceg, the widow of Independent founder Michael Erceg, who died in a 2005 helicopter crash near Raglan, New Zealand's first female billionaire.

Erceg - valued at $1.5 billion in this year's National Business Review Rich List - still holds an 11.75 per cent share of the liquor firm, meaning she stands to make another $176.2 million from the Japanese firm's acquisition.

Independent is the dominant player in New Zealand's RTD market, and is ranked number three in Australia, according to Asahi.

In a statement released yesterday, the Tokyo-listed company said Independent had net sales of $379.8 million in the year to September 2010, with an operating profit of $83 million during the same period.

RTDs have attracted criticism from alcohol campaigners, who claim the drinks are targeted at young and underage drinkers.

Distilled Spirits Association of New Zealand chief executive Thomas Chin said it was interesting that Asahi was forging ahead with its acquisition, given the Government's proposed Alcohol Reform Bill would have a big impact on Independent if passed into law.

"If the Government proposal goes ahead - and that is to restrict the alcohol content and the size of RTDs - Independent Liquor, in its current guise, as well as other RTD producers, would be significantly affected," he said.

Asahi said it had a long-term vision of increasing its offshore sales to 20 to 30 per cent of total group revenue.

The company has been on an acquisition drive in Australasia for two years, first buying softdrink maker Schweppes Australia for £550 million ($990 million) in 2009. Last week it declared its takeover of Auckland-based juice firm Charlie's unconditional after receiving the acceptance of 90.62 per cent of the company's shareholders.

The Japanese brewer also bought the mineral water and juice business of Australia's P&N Beverages for A$188 million ($236.6 million) in July.

"We can expect stable growth from Oceania, even though it may not be as big as China," Asahi president Naoki Izumiya said yesterday. "Our next challenge will be to build up our network in Asia."

Asahi's purchase of Independent is conditional on the deal gaining consent from foreign investment review bodies in New Zealand and Australia.

An Independent spokesman said no major changes were expected at the company, which employed 481 staff in September last year.

- Additional reporting: Bloomberg

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