Japan's Kirin Confirms Merger Talks

TOKYO (AP) -- Japanese beermaker Kirin Holdings Co. confirmed Tuesday it may merge with smaller rival Suntory Holdings Ltd. to create one of the world's largest food and drinks companies.

The combined entity would also give Japan its first brewery capable of competing globally with the likes of Anheuser-Busch InBev NV.

In a brief statement, Kirin described discussions as being at "at an initial stage." No agreements have been reached yet, it said.

Analysts have generally applauded the potential merger and say Kirin and Suntory are a good fit.

"The two would be able to forge a complementary relationship over a broad range of areas, including alcoholic beverages and soft drinks in the domestic market, food products in Asia and business expansion in China," Credit Suisse analyst Yoshiyasu Okihira said in a note to clients.

He said the merger would spark expectations for further industry consolidation.

Kirin and Suntory posted combined sales of beer, soft drinks and foods of about $41 billion last year -- higher than AB InBev or Coca-Cola Co. AB InBev, the world's largest brewer, would still rank ahead in the beer category alone, however, with sales last year of 16.1 billion euro ($22.5 billion).

Shares of Tokyo-based Kirin edged up 0.7 percent to 1,401 yen Tuesday, extending gains made Monday after news reports first tipped investors to the possible deal. Kirin is up 8.5 percent over two days.

Kirin, Japan's largest food and beverage company, is best known domestically as a beer and soft drink producer. The company has recently stepped up efforts to expand its presence in Asia to offset a saturated home market and an aging population.

Earlier this year, it agreed to pay A$3.3 billion ($2.6 billion) to take full control of major Australian brewer Lion Nathan Ltd. It also bought nearly half of San Miguel Brewery Inc. of the Philippines in May.

Suntory is a privately held company based in Osaka, western Japan. It is well known for its beer and whiskey, which was the subject of one of the most memorable lines in the 2003 hit film "Lost in Translation."

In the movie, an aging actor played by Bill Murray travels to Tokyo to shoot a whiskey commercial. While gazing into the camera, he must master the phrase: "For relaxing times, make it Suntory time."