Kirin investors find vitamin deal hard to swallow
27/04/2023 05:10
(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
MELBOURNE, April 27 (Reuters Breakingviews) - Cut
through Kirin’s 2503.T blather about how it “brings joy to
society” with its products “inspired by the blessings of nature”
and there’s financial logic to its $1.2 billion agreed deal for
Australian vitamins and supplements maker Blackmores BKL.AX .
The $15 billion Japanese company is best known as a brewer,
but sources more than half its top line from other businesses.
Adding its new purchase to its health sciences unit will not
only bolster the division’s revenue by more than 50%, based on
the group’s most recent annual results, but also means it could
finally turn an operating profit. Kirin, led by CEO Yoshinori
Isozaki, also reckons the deal will be accretive to earnings per
share in the first year.
Yet investors immediately wiped some $450 million off the
purchaser’s market value on Thursday, almost double the premium
it agreed to pay Blackmores’ shareholders. That improved
somewhat in morning trading, but scepticism is understandable.
Kirin’s M&A record is not encouraging: it took a financial hit
last year exiting its Myanmar joint venture; sold its Brazil
business for $700 million in 2017, six years after spending $3.9
billion for it; and paid a high price for a 30% stake in
cosmetics and kale-juice maker Fancl 4921.T in
2019. Blackmores may yet show Kirin has adopted a better
dealmaking regimen, but investors aren’t holding their breath.
(By Antony Currie)
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(Editing by Robyn Mak and Katrina Hamlin)
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