Asahi Breweries to buy Australian firm

Taking advantage of the strong yen, Asahi Breweries Ltd. said it will buy the third-largest soft drink company in Australia and is considering closing factories in the shrinking Japanese market.

Asahi said it will spend 27.2 billion yen ($321.1 million) to buy all the shares issued by P&N Beverages Australia Pty Ltd., whose main products are soft drinks, juice and mineral water.

P&N's share of the Australian soft drink market is about 10 percent. It posted sales of about 30 billion yen in a year that ended in June 2010.

Asahi also bought Schweppes Holdings Pty Ltd., the second-largest soft drink maker in Australia, in April 2009.

The combined share of P&N and Schweppes in the Australian market is 30 percent, with total annual sales reaching 100 billion yen.

P&N and Schweppes have few rivals in Australia, which raises expectations that Asahi will have stable sources of revenue Down Under.

Asahi will also consider integrating the two companies.

One reason that Asahi decided to buy P&N now is the strength of the yen. The Australian dollar was traded at nearly 90 yen in mid-April. Since then, the yen has risen to 75 yen against the Australian dollar.

"It is true that it is easy to buy foreign companies as the value of the yen has become higher," Asahi Breweries President Naoki Izumiya said in a news conference Thursday.

He also said Asahi will adopt a holding company system from July 2011 to buy other overseas companies and streamline its domestic businesses.

"There is a possibility that we will realign our factories," Izumiya said.

As the beer market in Japan shrinks, Asahi and its rivals are strengthening moves to form capital or business tie-ups with overseas companies, or buy them, especially in Asia.

Kirin Holdings Co. announced last month that it had acquired a 14.7-percent stake in Singaporean soft drink maker Fraser and Neave Ltd. In October 2009, Kirin made Australian beer maker Lion Nathan Ltd. a wholly owned subsidiary.

Suntory Holdings Ltd. bought New Zealand soft drink company Frucor Beverages Group in February 2009. It also acquired French soft drink maker Orangina Schweppes Group in November.

Sapporo Holdings Ltd. started to construct a brewery in Vietnam last month in a joint venture with a Vietnamese state-run company.

The higher yen is expected to fuel similar moves.

But in Japan, the beverage makers are closing beer plants due to shrinking demand.

Kirin, for example, will shut down its Hokuriku plant in Ishikawa Prefecture later this month and its plant in Tochigi Prefecture in late October.

Sapporo Breweries closed its factory in Ibaraki, Osaka Prefecture, in 2008.