Feb 4th - Sapporo To Buy Pokka In Soft-Drink Push

Sapporo Holdings Ltd. plans to spend about 30 billion yen to turn soft-drink producer Pokka Corp. into a subsidiary, adding to its 20% stake.

The move comes at a time when the Japanese brewer is scrambling to strengthen its soft-drink segment, which is smaller than its beer and real estate operations, in an effort to diversify its earnings. The firm also aims to accelerate its overseas expansion by tapping Pokka's sales channels in Asia outside Japan.

Sapporo will take a majority stake in the canned-coffee purveyor by acquiring shares from investment fund Advantage Partners LLP, which is Pokka's largest shareholder, and major confectioner and dairy firm Meiji Holdings Co., which owns roughly 20% of Pokka.

Sapporo's soft-drink business generates roughly 30 billion yen in annual sales, while Pokka logs about 97 billion yen in sales. Their combined sales would rank about eighth in the domestic soft-drink market.

Pokka has strength in lemon juice and is perhaps best known for its canned-coffee products. It owns some 90,000 vending machines mainly in greater Tokyo and Nagoya. Vending machines, which sell products at listed prices, have been bringing in stable profits amid intensifying price competition.

Pokka produces and sells beverages in Singapore, and it plans to construct a plant in Malaysia. Sapporo has cooperated with Pokka in production and distribution since taking a stake in 2009.

For Pokka, becoming a subsidiary of Sapporo means that it will have access to the brewer's strong finances and can boost sales of its products at home and abroad.

Domestic soft-drink manufacturers are increasingly consolidating to stay alive as the domestic market becomes saturated. Asahi Breweries Ltd. last year announced acquisitions of House Foods Corp.'s (2810) water business and Kagome Co.'s barley tea operations.