By Andrew Starke
Japanese brewers Kirin Holdings and Suntory have abandoned plans to create a combined food and drinks group after disagreeing over levels of control in a merged firm.
“Kirin Holdings Company Limited, which has been in merger negotiations with Suntory Holdings Limited, today announced that the negotiations have been terminated,” Kirin said in a statement, citing disagreement on whether to list the company as a contributing reason for the collapse of talks.
The two brewers began negotiations eight months ago with both being motivated by the need to grow outside the Japanese market, which is shrinking along with its population.
Both companies are represented in Australia.
However, the deal was complicated by the two companies’ different corporate cultures – Kirin is listed and based in Tokyo, while unlisted Suntory is based in Osaka and 90 percent owned by its founding family.
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.
The smaller company also wanted the merged entity to have the benefits of both a family company and a public company in equal amount. This was not acceptable to Kirin.
“Kirin had been negotiating on the premise that the new entity would be managed as a listed company in order to ensure appropriate management independence and transparency,” it said.
“However, it became apparent that Suntory held a different view on this matter, and Kirin determined that even if negotiations were to continue, they were unlikely to result in the establishment of a company that would fulfill Kirin’s aim of developing as a leading global company and earn the understanding and approval of Kirin’s domestic and overseas customers, employees, shareholders and other stakeholders. Kirin therefore resolved to terminate the negotiations.”