Kirin Holdings announced Friday that it will launch a tender offer for Fancl, turning the Japanese maker of skin care products and dietary supplements into a wholly owned subsidiary in a bid to diversify amid a flat beer market.
Kirin currently holds a 33% stake in Fancl shares. It is expected to pay around 220 billion yen ($1.39 billion) to purchase the remaining shares and aims to complete the deal by the end of the year.
The offer price is set at 2,690 yen per share, a 43% premium to the share’s closing price on Thursday. After Nikkei broke the news, Fancl shares jumped more than 20% on Friday to close at 2,284.5 yen. The buying period is from June 17 to July 29.
Fancl is expected to support the takeover by Kirin. When the acquisition is completed, Fancl will be delisted.
The company had consolidated sales of 110.8 billion yen for the fiscal year ended March, up 7% from a year earlier. It posted an operating income of 12.5 billion yen, up 60% on the year.
For the year ended December 2023, Kirin’s mainstay beer and other alcoholic beverages accounted for the majority of the company’s profit, at 119.9 billion yen. Its health science division, which includes supplements, posted a loss of 12.5 billion yen. Kirin hopes the Fancl acquisition will lift earnings at its health science division, making it profitable in the near future.
According to Euromonitor, a British market research specialist, the global market for vitamins and dietary supplements grew 20% in the five years to 2023, reaching $133.6 billion.
Growing health consciousness, triggered in part by the COVID-19 pandemic and the expansion of the middle class in emerging countries, has contributed to the market’s growth. With demand expected to continue rising, Kirin wants to develop markets worldwide, particularly in Asia.
In 2019, Kirin spent 130 billion yen to buy a one-third stake in Fancl on voting rights basis. The aim was to work with the company to develop and produce foods, beverages and supplements to extend healthy lifespans for consumers in Japan and abroad, where many populations are aging.
Kirin last August acquired Blackmores, Australia’s largest vitamin and supplement company, for about 170 billion yen, underscoring its focus on the sector. Blackmores has sales channels in 13 countries and regions, including Australia and Thailand.
Behind the drink maker’s latest move to acquire a health food company is a sense of crisis in the beer industry, which has been in decline since the mid-1990s. In the past decade alone, beer sales have fallen 23% in Japan. Given Japan’s declining population and growing health consciousness around the world, beer consumption is not expected to return to its previous level. (Source: asia.nikkei.com)
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