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Suntory Beverage seeks ¥476 billion in top 2013 IPO

Bloomberg

Suntory Holdings Ltd. is poised to raise as much as ¥476 billion by listing shares of its nonalcoholic beverage business in what would be Japan’s largest initial public offering this year.

The company has set a tentative IPO price of ¥3,800 per share for the July 3 Tokyo listing, according to a filing Wednesday with the Finance Ministry. The Suntory Beverage & Food unit may sell as many as 125.2 million shares including over-allotment, according to Bloomberg calculations based on the filing.

Suntory Holdings will hold 59.5 percent of the listing unit, said Midori Takahashi, a spokeswoman for the company.

The Osaka-based drinks maker as well as domestic rivals such as Asahi Group Holdings Ltd. and Kirin Holdings Co. have sought growth through overseas deals, as a declining population dampens domestic demand. Suntory Holdings has been exploring ways to fund deals and has set up a department within the listing unit to explore mergers and acquisitions.

“Suntory has become a very strong competitor now that it’s listing and can raise more money for acquisitions,” said Mikihiko Yamato, deputy head of research for JI Asia in Tokyo. “Some investors may move funds from Kirin, Asahi to Suntory.”

It would be the largest domestic IPO since Japan Airlines Corp.’s ¥663 billion offering last September, according to data compiled by Bloomberg. A price range will be set June 17 with final pricing expected June 24.

Nomura Securities Co., the nation’s biggest brokerage, said in January that it expects IPOs will climb to a six-year high. About 60 Japanese companies will announce debut share sales this year, a 25 percent increase from last year and the most since 121 in 2007, according to Nomura.

The IPO proceeds will be used for investments, including acquisitions to strengthen operations in developed and emerging markets, according to the company’s prospectus.

About ¥350 billion of the proceeds will be used for Suntory Beverage and around ¥120 billion of the remainder for Suntory Holdings, which will remain unlisted, said spokeswoman Takahashi.

The closely held whiskey and beer maker is known for its motto “yatteminahare” (go for it) created by its founder, Shinjiro Torii. As the country’s second-biggest drinks maker, it has focused overseas acquisitions on nonalcoholic beverages over the past five years.

The company bought France-based Orangina Schweppes Group for ¥300 billion in 2009 and paid €600 million in 2009 for New Zealand’s Frucor Beverages Group Ltd.

Industry shipments of beer, low-malt beer, and beerlike drinks in Japan last year fell 1 percent to 438 million cases in 2012, as demand fell for an eighth straight year.

Suntory Beverage, which accounted for about 60 percent of the parent’s operating profit in 2011, plans to double its sales to ¥2 trillion by 2020, it said in December.