Japanese brewer Kirin has stepped up its push into healthcare after launching a A$1.9bn ($1.3bn) takeover offer for Australia’s largest vitamin company Blackmores.
The company, founded in the 1930s, is one of Australia’s best-known alternative healthcare brands. Marcus Blackmore, its largest shareholder and son of the founder, and the company’s board backed the Kirin offer of A$95 a share, an almost 24 per cent premium to the share’s closing price on Wednesday.
Blackmores shares rose 22 per cent to A$93.64 on Thursday.
Blackmores is the latest in a string of Australia-listed companies to be sold in the past two years as Japanese companies embark on a series of acquisitions in the country. It is the second-largest takeover of an Australian consumer company this year after French cosmetics group L’Oréal bought luxury soap maker Aesop for $2.5bn this month.
In 2009, Kirin led a A$6.5bn buyout of the Lion Nathan brewery, which produces famous Australian beers including XXXX, Tooheys, Little Creatures and Stone & Wood.
Asahi, Kirin’s Japanese rival, owns Foster’s brewer Carlton & United Breweries. Mitsui and Mitsubishi, in alliance with BHP, are investors in Australia’s coal industry, while industrial brands including paint maker Dulux and logistics company Toll have been taken over by Japanese rivals in the past decade.
Kirin is expanding its healthcare and pharmaceutical business to diversify away from the domestic beer market, which has shrunk by a third from its 1994 peak.
Efforts to reinvent itself as a “fermentation biotechnology company”, however, have been met with investor criticism as rivals such as Anheuser-Busch and Asahi strengthen their core beer business. Following the announcement of the deal on Thursday, Kirin’s shares briefly fell 3 per cent.
Kirin expects health sciences to bring in annual revenue of ¥200bn ($1.5bn) by 2027 with an operating margin of 15 per cent. But last year, the business generated ¥103bn of revenue and an operating loss of ¥7.1bn.
In contrast, Blackmores is profitable and reported a 53.3 per cent underlying gross operating margin in the first half of its financial year.
Yoshinori Isozaki, chief executive of Kirin, said in a statement: “Blackmores presents an exciting opportunity to transform the scale and reach of our Health Science domain.”
Ryohei Nishio, an analyst at Moody’s Japan, said the deal would increase the Japanese company’s debt-to-earnings ratio to around 2.8 times if it were funded by debt.
“The transaction is consistent with Kirin’s long-term strategy of expanding its health science business. It also materially boosts Kirin’s geographical footprint in Australia, New Zealand, China and south-east Asia,” he said.
Blackmores was established 91 years ago by Maurice Blackmore who co-founded one of the country’s first health stores in Brisbane in 1938.
It listed on the Australian stock exchange in 1985 and became a market success, with shares topping A$200 in 2015 as demand for its products in China boomed.
Shares have been more volatile since 2019 after growth in China reversed and led to a drop in profit and a management shake-up.
