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THE TENDER OFFER DESCRIBED IN THIS PRESS RELEASE IS NOT BEING MADE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA. NO PERSON MAY APPLY FOR THIS TENDER OFFER FROM THE UNITED STATES OF AMERICA.
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November 16, 2006
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Business Alliance in Alcoholic Beverages Business of
Kirin Brewery Co., Ltd. and Mercian Corporation
Through Kirin Brewery's acquisition of Mercian's common stock,
both companies will aim to form a new and the strongest comprehensive
alcoholic beverages group in Japan.
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Kirin Brewery Co., Ltd. (President: Kazuyasu Kato) ("Kirin Brewery") and Mercian Corporation (President: Yuji Okabe) ("Mercian") have decided to enter into an agreement for the formation of a strategic business alliance in the alcoholic beverages business that will fully utilize each company's strengths. Through this business alliance, the Group will strive to realize KV 2015, its long-term operating framework for the Group with a goal of significant growth, and Mercian will strive to focus on and specialize in the target areas identified under its med-term operating plan. In addition, in order to strengthen the business alliance and to aim to become the strongest comprehensive alcoholic beverages group in Japan , Kirin Brewery will acquire the majority of Mercian's issued and outstanding common stock pursuant to a tender offer (the "Tender Offer").
The number of shares planned to be purchased is 67,000,000 shares (50.12% of the outstanding shares) and the tender offer period is from November 17, 2006 to December 18, 2006. The purchase price per share is ¥370 and the expected funds required for the Tender Offer will be ¥24.79 billion. The Tender Offer has been approved by the Board of Directors of Mercian.
Although RTD*1 and shochu are increasing their market shares, the domestic alcoholic beverages market as a whole tends to be shrinking, and consumers' needs are becoming more diversified. In this situation, Kirin Brewery is striving to strengthen the foundation of its comprehensive alcoholic beverages business. On the other hand, Mercian, in its mid-term operating plan 2006, focuses on the growth of wine and processing liquors*2, which are Mercian's strong areas, and is trying to shift its shochu and low alcoholic business ("RTD business") to businesses with a greater emphasis on "quality" rather than "quantity".
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Abbreviation of "Ready To Drink." In western countries, RTD means low alcoholic beverages that people drink directly from the bottle without pouring it into a glass. In Japan, RTD generally means chuhai or cocktails that people casually enjoy drinking. |
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Alcoholic products for cooking or food processing in a large container. Mainly used for business purposes. It is produced from refined sake, compound sake, sweet cooking rice wine, and liqueur, etc. |
The two companies have agreed to form a business alliance, since we have many common attitudes towards customers, quality and values in respect of the companies' alcoholic beverages businesses, and by fully utilizing each company's strengths, we are convinced that it is possible for both companies to increase the growth and profitability of their businesses.
As part of a business alliance utilizing each company's strengths, Kirin Brewery will consolidate and integrate its wine business into Mercian's wine business, and Mercian will aim to become the top wine manufacturer, supplier and distributor. In addition, Mercian will consolidate and integrate its shochu and RTD businesses into Kirin Brewery's businesses, and Kirin Brewery will strengthen its overwhelming number one position in the RTD market and will implement a structure for attacking the shochu market. By utilizing the merchandising platform of Kirin Communication Stage Co., Ltd., we aim to further increase sales of Mercian's products in both the home and business markets.
In addition, through the efficient use of the infrastructure of each company, including manufacturing and distribution bases, and the proactive mutual exchange and utilization of personnel, we aim to improve the efficiency and profitability of our management resources.
As a result of the Group's implementation of a pure holding company system in July 2007, Mercian, under Kirin Holdings, Co., Ltd., will support the Kirin Group's drastic growth in the future, by engaging in its business activities with expanded group synergies, independence, autonomy and mobility in cooperation with Kirin Brewery.
As a corporate group that always nurtures a variety of connections with our customers and promotes the pleasure of "food and health," we will continue various activities to respond to our customers' expectations.
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