Japan: Nomura Holdings and Carlyle Group seeking to acquire Japan’s fifth-largest brewer Orion Breweries
Orion Breweries' prospects for winning over more drinkers in U.S. and Asian markets, helped by its brand recognition among American military personnel and tourists, put the unlisted Japanese beer on the radar for a takeover offer by Nomura Holdings and Carlyle Group, the Nikkei Asian Review reported on January 19.
The Japanese investment bank and the U.S. private equity firm seek to acquire Japan's fifth-largest beer brewer in a deal expected to be worth several hundred million dollars, Nikkei Business reported.
Founded in 1957, Orion hails from Okinawa, a part of Japan where the population is still growing. Yet its prospects for domestic sales growth are grim.
Orion has suffered along with market leaders Asahi Group Holdings and Kirin Holdings as Japanese youth turn away from beer. Its beer shipments tumbled 13% in 2018 from 2009, and its share of the nationwide beer market came to just 0.9%.
But it holds some advantages that bigger peers do not.
Overseas markets offer its best hope for growth. In the U.S., Orion has built up a following of sorts among U.S. military personnel and their families who drank its brew at bars and restaurants while stationed in Okinawa. The brewer ships as far afield as New York, where it is trying to ride a wave of popularity of Japanese food and drink.
Orion also sits close to Asian markets. Nearly half the people who tour its Nago brewery are tourists visiting Japan, many of them Asians.
Sales abroad make up just 5% of the total on a volume basis, but the brewer is putting more effort into marketing in places like Taiwan and South Korea. Orion likely sees an opportunity to use Carlyle's global network to speed its overseas expansion.
Nomura and Carlyle will reportedly buy Orion stock from about 600 mostly individual shareholders. Orion is expected to maintain a partnership it struck in 2002 with compatriot Asahi Breweries, its top stakeholder with 10% of outstanding shares.
Responding to the reports, Orion said on Friday that it was "always considering various options."
Acquiring the brewer would add to the deal count for Nomura, which restarted proprietary investment in January 2018 with the launch of Nomura Capital Partners, following a hiatus after the global financial crisis.
The Japanese financial group reached out to Carlyle, which has a track record in food and beverage deals including Japanese snack maker Oyatsu, the company behind Baby-Star dried noodle snacks.
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