Kirin Holdings Co. and Suntory Holdings Ltd. said Monday their tieup negotiations failed because they could not agree on the merger ratio.

“To survive global competition, our company thought the merger (with Suntory) would play a huge role on various fronts, so we made our best possible efforts,” Kirin President Kazuyasu Kato told a news conference in Tokyo.

Kato said Kirin thought tying up with Suntory, which is not listed, would result in a merged, and listed, holding company with transparent, independent management.

“But we could not agree with various things on this point,” Kato said.

Separately, Suntory President Nobutada Saji said the talks, first revealed last July, were canceled due to differences over the merger ratio.

“From the beginning, we said it would be a 50-50 based merger,” and the ratio of the stock given to the Suntory founding families would naturally follow that base, Saji told reporters gathered at Suntory’s Tokyo office.

Suntory’s founding family owns about 90 percent of the firm, and the merger ratio was a key factor in concluding the merger talks.

Suntory management had insisted that the firm hold more than 33.3 percent of the holding company to be created, thus giving the firm the power to veto key management decisions.

“We said this merger would not happen if such a deal was not part of it,” Saji said. “I think there might have been a difference between the two companies over whether (the Suntory founding families) would be a silent majority or shareholders who will have a say on the management when emergencies come up.”

He added that Suntory wanted the merged company to have the positives of a family company and a public company in equal amount.

But “Kirin might want to stay a public company as it is now,” Saji said.

News of the failed negotiations sent Kirin’s share price plummeting more than 8 percent at one point Monday, highlighting the need for the company to find a new strategy to boost its presence in growing overseas markets amid saturated demand at home.

Kato did not say at the press conference that the main reason the talks failed was whether Suntory’s founding family would get more or less than a 33.3 percent share, but he did say Suntory had agreed the new holding company would be a listed firm.

Kato stressed, however, that Kirin believed management and shareholders should be separated to secure transparency. Saji countered, saying Suntory’s management is equally transparent compared with other companies.

A merger between a listed and an unlisted firm is rare.

The merger between Kirin, which passed Asahi Breweries Ltd. to become Japan’s biggest brewer, and Suntory, the No. 3 brewer, would have created one of the world’s biggest drink and food companies, with annual sales of ¥3.8 trillion.

With the Japanese market shrinking amid the declining birthrate, the two sought to expand and take the lead in global competition.

Kato said Kirin will continue seeking merger and acquisition deals and find a new, strong partner as part of its key growth strategy to expand its presence overseas. He did not elaborate.

Following the announcement on the cancellation of the talks, the Tokyo Stock Exchange temporarily halted trading in Kirin shares to provide time for investors to digest the information. The share price was down more that 7 percent at ¥1,337 at the close of trading.

Information from Kyodo added

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