By Byron Kaye and Mariko Katsumura
SYDNEY/TOKYO (Reuters) -Japanese drinks and drugs maker Kirin Holdings Co Ltd will buy Blackmores Ltd for A$1.88 billion ($1.24 billion), the pair said on Thursday, sending the Australian health firm’s shares surging to a more than seven-year high.
Kirin has offered A$95 cash per Blackmores share, a 23.7% premium to the stock’s last close, and a tad higher than its 22.4% jump in morning trade.
The deal presents an exit for a one-time market darling that has been struggling to recover sales of its natural health supplements and vitamins since COVID-19 containment measures from 2020 ended the “daigou” boom, in which Chinese consumers bought goods abroad in bulk and carried them home.
Before the Kirin deal, its shares had been trading at one-third of their value at the height of the daigou craze in 2016.
The board of Blackmores has unanimously recommended shareholders support the deal, with top shareholder and former chairman Marcus Blackmore also agreeing to vote in favour.
Blackmore, son of the firm’s founder and 19% shareholder, said he has been looking to exit for 18 months since developing what he called an “antagonistic” relationship with its board.
“Kirin … have a strong presence in Australia already, they take a long-term view about things, and they genuinely believe they can improve on how Blackmores is run, and I support that too,” he told Reuters by telephone.
“When you’ve spent 57 years at a business, you don’t want to see the business suffer, and you want to see the business successful. I have no doubt in my mind that Kirin will deliver on that promise to me.”
For Kirin, owner of several top Australian beer brands, the Blackmores buy will further help diversify its business and grow its presence in a country that could see increased exports as it repairs relations with the region’s biggest economy, China.
The company, known for its alcoholic and non-alcoholic drinks as well as its pharmaceuticals business, said it aims to become the Asia-Pacific region’s leading consumer health science firm, having acquired related assets in Japan and abroad.
AUSTRALIA FOCUS
The deal comes amid an M&A spree in Australia that market watchers expect to continue in the near term. The country has also been a popular destination for Japanese firms in the past looking for growth beyond their stagnant domestic economy.
Kirin and Asahi Group Holdings Ltd dominate Australia’s beer market, while Nippon Paint Holdings Co Ltd bought Australia’s biggest paint maker DuluxGroup Ltd for A$3.8 billion 2019. A year earlier, Mitsubishi UFJ Financial Group Inc paid A$4.1 billion for Commonwealth Bank of Australia’s global asset management unit.
Blackmores expects to declare a special dividend of A$3.34 a share if the buyout succeeds, in which case Kirin will reduce its per-share payout by that amount. The dividend will allow shareholders to benefit from franking credits – a tool to prevent double taxation.
Blackmores’ share price rose as much as 22.4% to A$94, its highest since December 2021. Kirin’s shares fell as much as 3% to 2,158 yen, their worst intraday loss since Feb. 15.
Blackmores shareholders will be able to vote on the offer at a shareholder meeting in July and the companies expect the deal to close in early August. Barrenjoey Capital Partners and Adara Partners are acting as joint financial advisers.
($1 = 1.5131 Australian dollars)
(Reporting by Byron Kaye in Sydney and Mariko Katsumura in Tokyo; Writing by Praveen Menon; Editing by Sherry Jacob-Phillips and Christopher Cushing)
