Suntory Holdings Ltd. is prepared to spend 300 billion yen on mergers and acquisitions in the medium term, President Nobutada Saji told The Nikkei on Thursday.
Suntory plugged more than 400 billion yen into M&As from 2008 to 2010, including its 2009 acquisition of French beverage firm Orangina Schweppes Group. Such moves ended up lifting the firm's debt-equity ratio to around 1.
- Nobutada Saji
Now the plan is to invest 300 billion yen in future M&As while keeping the ratio from going above 1. Suntory will likely dip into its own cash as well as take out loans.
Suntory and Kirin Holdings Co. began merger negotiations in 2009, only to officially end them last February because of irreconcilable differences over such issues as the integration ratio.
"That chapter is over," Saji said.
But he also held out the possibility of a future relationship, saying, "We didn't part on bad terms, so another attempt at forging an alliance targeting growth could be an option."
Suntory has targeted consolidated sales of around 2 trillion yen in two years. Group sales are believed to have reached 1.75 trillion yen for the year ended Dec. 31. The company aims to raise its percentage of overseas sales to 25% from the estimated 22% of fiscal 2010.
Suntory's pretax profit likely hit 100 billion yen last fiscal year as its pretax profit margin came to around 6%.
"We hope to secure a 200 billion yen pretax profit about five years down the road while raising the pretax margin to at least 10%," Saji said.
To achieve these goals, Suntory will work to build alliances and partner with both domestic and foreign food and beverage companies.
"We will actively pursue M&As as a way to expand the Suntory brand worldwide," Saji said.
