DealBook: Suntory Plans Big I.P.O. for Its Food and Beverage Unit

Yuriko Nakao/ReutersSuntory Beverage and Food is Japan’s largest manufacturer of nonalcoholic drinks.

TOKYO – Suntory Holdings got approval from the Tokyo Stock Exchange on Wednesday to list its food and soft drinks unit, paving the way for what is expected to be Asia’s biggest initial public offering this year.

Suntory Beverage and Food, Japan’s largest manufacturer of nonalcoholic drinks, has set a preliminary target to raise around 475 billion yen ($4.8 billion), two people with direct knowledge of the offering said on Wednesday.

If it raises that much, the deal would be the biggest I.P.O. in Asia this year, and the second-biggest equity sale in the region after Japan Tobacco’s $7.3 billion follow-up offering in March.

Facing a saturated market at home, the company has been eager to raise money to bolster its presence outside Japan. In 2009, Suntory bought the European beverage maker Orangina Schweppes for 2.6 billion euros, or $3.4 billion at current exchange rates, and followed up with the acquisition of the Funcor Group, one of New Zealand’s largest beverage makers.

The offering comes at an opportune time. Tokyo’s stock market has surged almost 40 percent this year and around 65 percent in the last six months, thanks to optimism over economic policies promised by Prime Minister Shinzo Abe.

Companies listed in Japan have raised a total of $18.6 billion this year in 70 new share sales, data from Thomson Reuters show, more than triple the $5.9 billion raised in 50 deals in the period a year earlier. The figures include I.P.O.’s, follow-up offerings and convertible bond sales.

Suntory, a century-old company based in Osaka and known for producing Japan’s first whiskey — the actor Bill Murray famously pitched it in fictitious advertising in the film “Lost in Translation” — is one of Japan’s largest privately held companies. Its sprawling operations are as varied as brewing beer, manufacturing soft drinks and growing and selling flowers. In Japan, it is also the distributor of Häagen-Dazs ice cream and runs Pepsi’s bottling businesses.

Analysts have said that despite a pickup in the domestic economy, Japan’s graying, shrinking population does not bode well for growth in food and beverages. That leaves companies in that sector with little choice but to look elsewhere. Kirin Holdings and Asahi Group Holdings, Suntory’s rivals in Japan, are also looking to expand overseas through acquisitions.

Suntory’s beverage unit plans to sell 119 million shares to the public at a preliminary price of 3,800 yen ($37.40) apiece, said the people familiar with the matter, who were not authorized to speak to the news media. The deal includes an option to sell an additional 6.2 million shares if demand is strong.

The beverage unit will issue 93 million new shares and the parent company will sell 26 million existing shares. After the listing, Suntory Holdings will own 61.5 percent of the beverage company.

Suntory and its bankers will market the deal to potential domestic investors for two weeks beginning Friday, and will go on tour to present the offering to international investors from Monday through June 12. The offering is set to be split evenly between domestic and foreign investors, though the exact breakdown could change in line with investor demand during the book-building period, according to the filing.

The price range for the deal will be announced on June 17, and final pricing will be set on June 24. Shares in the beverage unit will begin trading on July 3, according to a filing with the Tokyo Stock Exchange on Wednesday.

The lead global underwriters on the deal are JPMorgan Chase, Morgan Stanley and Nomura Holdings. The lead banks on the domestic portion of the offering are Nomura and Mitsubishi UFJ Morgan Stanley Securities.

Neil Gough reported from Hong Kong.

Article source: http://dealbook.nytimes.com/2013/05/29/suntory-unit-eyes-asias-biggest-i-p-o-of-2013/?partner=rss&emc=rss