* Kirin owns 46.1 pct, rest worth at least $1.7 billion
* Kirin chases a piece of Australia's beer duopoly
* Kirin shares up 3.6 pct; Foster's, CCA also buoyed
(Adds analyst and investor comment and detail)
By Simone Giuliani and Taiga Uranaka
MELBOURNE/TOKYO, April 23 Japanese brewer Kirin
Holdings (2503.T) is seeking a buy out of Australia's No.2
brewer, Lion Nathan Ltd LNN.AX, in a deal shareholders said
could be worth at least A$3.3 billion ($2.3 billion).
The high-margin Australian market, which operates as a
duopoly between Foster's Brewing Group Ltd FGL.AX and Lion
Nathan, has long been cited as appealing to Japanese brewers
who have been looking to expand beyond a shrinking home market.
It has also become more affordable since Australia's dollar
shed a third of its value against the yen in the last 10
Lion Nathan, the maker of XXXX Gold and Hahn beer, said
Kirin had made an approach for the 53.9 percent of shares it
doesn't already own. No price was given, but analysts said
history demonstrated that Japanese brewers can offer generous
Analysts and investors pointed to the A$11.50 a share Kirin
offered to pay for Lion Nathan shares as part of the funding
Lion needed for a failed A$7.6 billion bid for Australian
bottler Coca-Cola Amatil Ltd (CCL.AX) last year.
"They showed their hand with the Coke deal by being willing
to put in A$11.50 (a share) there to help fund that," said
Diane Flynn, a portfolio manager at Northward Capital.
Shares in Kirin, the maker of Lager Beer, were up 3 percent
in afternoon trade in Tokyo. Lion Nathan shares, on a trading
halt, last traded at A$8.31. The deal would be worth A$2.4
billion at the current share prices.
"The proposal is currently preliminary, incomplete and
non-binding and proposal terms are indicative only at this
stage," Kirin said in a statement.
Lion Nathan said it would establish an independent board
committee to clarify and confirm the details of the proposal.
Recent deals in the sector have been struck at 12-15 times
earnings before interest tax depreciation and amortisation,
with the biggest, last year's $52 billion takeover of
Anheuser-Busch by InBev INTB.BR, priced at 12.4 times
A valuation at that level would put an offer at over
A$12.10 a share based on 2009 EBITDA forecasts. However.
markets have slid since the InBev deal and analysts said
Kirin's sizeable Lion stake meant it was unlikely rival offers
Kirin, which has been locked in a fierce battle with Asahi
Breweries (2502.T) for the top slot in Japan's beer market, has
been the most aggressive in pursuit of overseas acquisitions.
It has spent 137 billion yen ($1.4 billion) in Australia
recently buying dairy and juice firm National Foods and milk
group Dairy Farmers.
Kirin had also said it was willing to commit A$3.76 billion
to back Lion's failed bid for Coca-Cola Amatil. Now investors
are wondering if there are even more deals on the cards in
"The bigger implication is for the dynamic of the market in
Australia," said a fund manager who declined to be named. "Will
they become more acquisitive, buying other things?"
Coca-Cola Amatil shares rose 5 percent to A$8.79 and
Foster's gained 7 percent to A$5.19 in afternoon trade.
In February, Kirin also struck a deal to buy up to 49
percent of Philippine San Miguel Brewery SMB.PS for $1.4
billion and Japanese media reports said it was interested in
Oriental Brewery, Anheuser-Busch InBev's South Korean beer
Analysts said Kirin and its rivals had little choice but to
pursue overseas acquisitions, given Japan's beer market shrank
by 15 percent in terms of shipment volume in the past decade.
"It's not a bad move to fully take over a profitable
company, it will help Kirin's cash flow," said Yoshiyasu
Okihira, food sector analyst at Credit Suisse in Tokyo.
"But the positive impact on Kirin's profits may be limited
given the goodwill and other costs," he said.
In February, Lion Nathan reaffirmed its annual profit would
be A$300-A$315 million in the 2009 financial year.
(Additional reporting by Gyles Beckford, Sonali Paul and Bruce
Hextall, editing by Mark Bendeich and Ian Geoghegan)