TOKYO-Suntory Holdings got the nod Wednesday to list its food and soft drinks unit in Tokyo, paving the way for what is expected to be Asia’s biggest initial public offering so far this year.
Suntory Beverage & Food, Japan’s largest manufacturer of nonalcoholic drinks by sales, has set a preliminary target of raising around 475 billion yen ($4.8 billion), two people with direct knowledge of the offering said Wednesday.
If it raises that much, the deal would be the biggest I.P.O. in all of Asia this year, and the second-biggest equity sale in the region after Japan Tobacco’s $7.3 billion follow-up offering in March.
Facing a saturated market at home, the Osaka-based beverage company has been eager to raise money to bolster its presence overseas. In 2009, Suntory bought the European beverage maker Orangina Schweppes for 2.6 billion euros, or $3.4 billion at the current exchange rate, and followed up with the acquisition of Funcor Group, one of New Zealand’s largest drink makers.
The offering comes at an opportune time. Tokyo’s stock market has surged almost 40 percent this year and around 65 percent in the past six months, thanks to optimism over bold economic policies promised by Prime Minister Shinzo Abe.
Suntory, a century-old company known for producing Japan’s first whiskey â€" the actor Bill Murray famously hawked it in fictitious advertising in the film ‘‘Lost in Translation’’ â€" is one of Japan’s largest privately held companies. Its sprawling operations are as varied as brewing beer, manufacturing soft drinks and growing and selling flowers. In Japan, it is also the distributor of Häagen-Dazs ice cream and runs Pepsi’s bottling businesses.
Analysts have said that despite a pickup in the domestic economy, Japan’s graying, shrinking population does not bode well for growth in food and beverages. That leaves companies in that sector with little choice but to look overseas. Kirin Holdings and Asahi Group Holdings, Suntory’s rivals in Japan, are also looking to expand overseas through acquisitions.
Suntory’s beverage unit plans to sell 119 million shares to the public at a preliminary price of 3,800 yen, or $37.40, per share, said the people familiar with the matter, who were not authorized to speak to the news media. The deal includes an option to sell an additional 6.2 million shares if demand is strong.
The beverage unit will issue 93 million new shares and the parent company will sell 26 million existing shares. After the listing, Suntory Holdings will own 61.5 percent of the beverage company.
Suntory and its bankers will market the deal to potential domestic investors for two weeks beginning Friday, and will go on tour to market the offering to international investors from Monday through June 12.
The price range for the deal will be announced on June 17, and final pricing will be set on June 24. Shares in the beverage unit will begin trading on July 3, according to a filing to the Tokyo Stock Exchange on Wednesday.
The lead underwriters on the deal globally are JPMorgan, Morgan Stanley and Nomura Holdings. The lead banks on the domestic Japanese portion of the offering are Nomura and Mitsubishi UFJ Morgan Stanley Securities.
Neil Gough reported from Hong Kong.
