Japanese drinks maker Suntory Beverage & Food revealed its plans to halt potential acquisition in the next 12 months as it seeks to integrate its past deals and expand its current operations. Suntory recently got listed, which was dubbed as the biggest initial public offering in 2013 in Asia.
In an interview in Tokyo yesterday, President and Chief Executive Officer Nobuhiro Torii said Suntory will mull over issuing new shares should its potential dealmaking will result to an excess of its JPY500 billion or USD4.9 billion initial budget. Torii also added that Suntory could also resort to selling bonds to raise additional funds, but emphasized that there are no detailed plans yet.
"I don't think we have enough capacity or ability to pursue another opportunity at this point. At least I have to take a break for 12 months. (After that), if we deliver the plan in the next year, then our financial capability will grow," Torri told Bloomberg.
Suntory, who is the seller of Orangina soda and Boss coffee, in November had cut its profit outlook due to rising costs in marketing to boost its domestic sales and the economic slump in Europe. After trading in July and raising USD4 billion in its IPO, Suntory is faced with an aging population and competition from larger foreign rival Coca-Cola Co at home.
Mizuho Asset Management Tokyo-based fund manager Co Takashi Aoki said about Suntory's plans to hold off with acquisitions, "I think it's a good thing. This year's profit is a little bit lower than investors' expectations, so they should focus on improving its profitability."
Despite the company's break from acquisitions, Torii said the company could pursue dealmaking so long as it is opportunistic and that strategic acquisitions might happen within the succeeding year.
Suntory's shares on the Tokyo Stock Exchange rose 0.9% and closed JPY3,270 per share yesterday, while the broader Topix index increased 0.5%/ Suntory's stock is at 5.5% above its debut price.
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