October 26, 2016 / 4:02 AM / 3 years ago

UPDATE 1-Kirin, Japan Coca-Cola bottlers talk distribution deal, capital tie-up

* Kirin says in talks for cooperation in distribution, procurement

* Deal could involve cross-shareholding - Nikkei (Adds comments from Kirin and bottlers; share price)

TOKYO, Oct 26 (Reuters) - Japanese beverage company Kirin Holdings said it is in talks with Japan’s two Coca-Cola bottling companies, Coca-Cola East Japan and Coca-Cola West, on cooperating in distribution and procurement through a capital tie-up.

“We are discussing the matter with Coca-Cola group and nothing has been determined at this point,” Kirin said in a statement after the Nikkei business daily reported that they are in negotiations.

“We are looking at cooperating in distribution and procurement, a Kirin spokesman said. The agreement may be concluded before the end of the year, the Nikkei reported.

Kirin is looking at cross-holding shares in a new entity formed by the merger of Coca-Cola West and Coca-Cola East Japan, while Coca-Cola Co through its Japan unit will hold a stake in Kirin’s beverage unit, the paper said.

The two Japanese Coca-Cola companies, bottle and distribute Coca-Cola drinks in Japan and manage networks of vending machines selling the beverages. The companies are business affiliates of Coca-Cola Co but are not subsidiaries.

The two Coca-Cola bottlers, in separate statements, confirmed that talks were underway, but said no decision had been made.

Kirin’s shares gained 1.6 percent in morning trading in Tokyo, with Coca-Cola East Japan rising 5.5 percent and Coca-Cola West up by 4.8 percent. That compares with a 0.2 percent decline in the benchmark Nikkei 225 index. (Reporting by Tim Kelly and Ran Kim; Editing by Stephen Coates and Muralikumar Anantharaman)

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