PEP, Unitas exit Independent Liquor to Asahi

According to sources familiar with the situation, PEP and Unitas wanted a partner to provide fresh capital, but received sufficient interest from prospective buyers that they opted for a full exit. It's no coincidence that this interest came at a time when Japanese beverage firms are aggressively expanding into new markets. Asahi is said to have overcome rival bids from Kirin and Suntory.

The Japanese firm's Australian subsidiary plans to buy all outstanding shares in Flavoured Beverages Group, Independent Liquor's parent, and close the deal by September. The transaction values the company at 13x EBITDA. Kirin's A$3.3 billion buyout of Australia's Lion Nathan in 2009 was valued at 12.5x EBITDA, while SABMiller is offering $10 billion, also at 12.5x EBITDA, for Foster's.

PEP and Unitas each own 43.9% of Independent Liquor; a further 11.75% is held by Lynne Erceg, widow of the company's founder, who stands to make NZ$179 million from the sale.

Independent Liquor, which specializes in ready-to-drink (RTD) alcoholic beverages and premixed hard-liquor drinks, posted revenues of NZ$414.4 million last year but still made a loss of NZ$22.7 million. It relies on Australia for 60% of its sales and was hit hard by a 70% tax hike on pre-mixed alcoholic drinks in April 2008.

PEP and Unitas brought in new management in February 2009 in a bid to turn the business around. This led to unprofitable brands being jettisoned and a greater focus on RTDs Woodstock Bourbon and Vodka Cruiser and Cody's. Management also introduced cost controls but spent money on sales operations, notably strengthening distribution in the US, a key target market alongside China.

For Asahi, the acquisition of Independent Liquor represents another step towards its goal of having overseas sales account for 20-30% of total sales by 2015, up from about 6% at the end of last year. The company is said to have earmarked $10 billion for M&A. Asahi already owns Schweppes Australia, acquired in 2009, and is in the process of purchasing the water and juice business of P&N Beverages Australia as well as New Zealand soft drinks maker Charlie's Group. It also plans to buy Permanis, PepsiCo's Malaysia-based bottler, for about $275 million.

Asahi - like Kirin and Suntory, which have been pursuing Schincariol and GarudaFood, respectively - is under pressure to diversify its business as sales slow Japan. Its efforts are supported by low capital costs and a strong yen.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Exits
• Consumer
• North Asia
• Australasia
• Pacific Equity Partners
• Unitas Capital