Japan's Asahi To Buy Calpis For $1.5 Billion

Asahi Group Holdings (Tokyo: 2502), the Japanese beer company, said Tuesday it would buy milk producer Calpis for 120 billion yen ($1.5 billion) in its largest acquisition to date as it seeks more revenue outside of beer sales.

Tokyo-based Asahi, whose brands include Super Dry beer and Nikka whiskey, will buy the company from food and chemical conglomerate Ajinomoto Co. (Tokyo: 2802).

“By combining management resources of Asahi and Calpis, the two companies will be able to jointly seek further strengthening and expansion of both the domestic and overseas beverage businesses, Asahi said in a statement.

The acquisition follows Asahi's $3.7 billion in deals over the past five years, including stakes in Chinese beer brewery Tsingtao, Australia's Schweppes and New Zealand's Independent Liquor. It has been seeking new sources of revenue as beer sales fall in Japan. The company expects soft drinks to account for 22 percent of its 1.6 trillion yen in sales in 2012.

The deal is expected to close by October, with financing from a mix of cash and debt. Ajinomoto said it plans to use the proceeds to fund mergers and acquisitions and buy back 7.39 percent in outstanding shares for 50 billion yen, according to Reuters.

Merrill Lynch advised Asahi and JPMorgan Chase advised Ajinomoto.

Asahi's shares rose 0.28 percent to 1,762 yen at Tuesday's close. Ajinomoto was up 1.36 percent to 1,043 yen at close.