Analysts and investors have reacted badly to a breakdown in merger talks between Kirin Holdings and Suntory.
Kirin’s shares price tumbled 7% on the Tokyo Stock Exchange today (8 February), after it announced an end to negotiations with Japanese rival Suntory.
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Both firms claimed to have terminated the talks, mirroring the power tussle that has been played out behind the scenes over the last six months.
The root of the breakdown was disagreement over the make up of the merged entity and the way it would be run.
Kirin, the owner of Australia’s Dairy Farmers and National Foods, is a publicly listed company. Meanwhile, Suntory, which makes various health food brands in Japan, where it also distributes Haagen Dazs ice cream, is a private enterprise with a different business ethos.
“From a Kirin standpoint we think it is rational to opt for no merger rather than one with irrational conditions, but we see termination as negative for the medium to long term due to the substantial potential synergies,” an analyst at Goldman Sachs in Tokyo said.
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By GlobalDataIt could also be argued that only a combined company would have the clout necessary to compete with top multinationals in the global food and drinks sector.
Japan’s food and drink industry majors are looking to expand outside of a declining domestic market.
