Japan's Asahi eyes overseas M&A to quadruple sales of Super Dry beer (updated)

Asahi group

26/02/2024 08:40

(Adds share performance in last paragraph.)
    By Mayu Sakoda and Rocky Swift
       TOKYO, Feb 26 (Reuters) - Japan's Asahi Group Holdings
 2502.T  is on the hunt for acquisition targets in the United
States and elsewhere to quadruple overseas sales of its flagship
Super Dry beer by 2030, its chief executive said.
    The beverage giant took a step towards that goal last month
when it said it was buying Wisconsin-based Octopi Brewing, which
will allow it to manufacture Super Dry in the United States
rather than importing the beer from its European factories.
    For the time being, the company is looking at M&A
opportunities in emerging markets in Africa, Asia and South
America, Asahi President Atsushi Katsuki told Reuters, citing an
absence of good U.S. targets.
    Katsuki acknowledged investor concern that Asahi did not
have much of a presence in the United States.
    "The U.S. would be the largest market for us in terms of
beer and it's the only growing market among developed countries
in terms of population," he said.
    But while U.S. market is huge in terms of potential growth,
more takeovers by Asahi there were unlikely to happen until next
year at the earliest, he added.
    North America accounts for just 6% of Super Dry's overseas
sales, which currently stand at about 2 million hectolitres
(52.8 million US gallons).
    Asahi is among a number of Japanese companies seeking growth
in the United States.
    Spurred on by the need to seek growth outside of their
shrinking, ageing home market, Japanese firms went on an
overseas buying spree worth 8.1 trillion yen ($54 billion) last
year, the most since 2019, according to LSEG data.
    "It's no longer an environment where acquisitions are made
simply for economic value. Sometimes it's necessary for a
company to take on a little too much in order to transform
itself," Katsuki said.
    Nippon Steel  5401.T , for example, plans to buy U.S. Steel
 X.N  for $15 billion but has encountered opposition from U.S.
lawmakers and U.S. presidential hopeful Donald Trump.
    Katsuki said the protectionist pushback appeared to have
emerged because U.S. Steel was a "rust belt" symbol, and the
merger would likely succeed in the end. But the uncertainty that
a re-election of Trump might bring meant that it was probably
better to lock in refinancing of debt sooner than later.
    Asahi has prioritised paying down debt since its last major
overseas acquisitions - the Australian operations of
Anheuser-Busch InBev  ABI.BR  in 2020 and the Central and
Eastern European businesses of SABMiller in 2017.
    The company's shares have risen 12% over the past 12 months,
underperforming a 43% surge in the benchmark Nikkei  .N225 ,
which closed at a fresh record high on Monday.
   

($1 = 150.5000 yen)

 (Reporting by Rocky Swift and Mayu Sakoda; Editing by Edwina
Gibbs)
 ((rocky.swift@thomsonreuters.com;))