Japanese beverage behemoth Kirin to buy Blackmores in $1.9b deal

The board of vitamins company Blackmores (ASX: BKL) has unanimously backed a takeover offer from Japanese beverage giant Kirin that values the Australian firm at $1.88 billion.

The mammoth takeover offer represents a whopping 23.7 per cent premium for Blackmores shareholders and would see Tokyo-headquartered Kirin take full control of the Sydney-based company famous for its supplements and vitamin products.

Though still subject to regulatory approval, the target’s board has unanimously recommended shareholders accept the $95 per share offer, noting it is ‘in the best interests of Blackmores shareholders’.

“The Kirin Scheme represents an attractive, all-cash transaction. The Blackmores Board believes the agreed Scheme Consideration represents appropriate long-term value for the Company and an attractive outcome for Blackmores shareholders,” Blackmores chair Wendy Stops said.

Listed on the Tokyo Stock Exchange and founded in 1885, Kirin is an internationally-recognised beverage, pharmaceuticals and health science company and is best known for its portfolio of alcoholic drinks that include some Australian names like XXXX and James Squire, and Japanese brands like  Kirin Ichiban and Honkirin.

On the health science front, Kirin - which has a market capitalisation of $22.9 billion - owns the likes of supplements brand iMUSE and American brain-health nutrient citicoline maker Cognizin.

Blackmores CEO and managing director Alastair Symington said the bid from Kirin represented “an important day in the history of Blackmores”.

“The Kirin proposal recognises the strong leadership position that Blackmores, through its brands and people, has established in the natural health sector across the Asia Pacific region over our long history,” Symington said.

“Importantly it also confirms the significant opportunity that lies ahead for our employees and other key stakeholders of Blackmores as both companies come together to combine their focus on growing Kirin’s health science business across the world.”

Symington added that the proposed combination of the two companies was testament to the work done by Blackmores over the last three years to reposition the business for sustainable profitable growth.

“For decades, Kirin has sought to leverage its evidence-based ingredient technology outside of its core beverage categories, and has increased its focus on health-related products,” the CEO said.

“The proposed acquisition of Blackmores will accelerate Kirin’s aspiration to become the leading health science company in Asia-Pacific. The combined company will have a larger platform to further leverage the Blackmores brand, accelerate penetration into high-growth Asian markets, and expand its presence into new geographies.”

For the CEO and President of Kirin, Yoshinori Isozaki, Blackmores represents a chance for the company to grow its presence in the health science domain.

“Kirin Group is working to create social value and economic value by solving social issues through our business activities, and we have been transforming our business from a brewing business to the business model creating value across Food & Beverages and Pharmaceuticals domains, based on the concept of "CSV" (Creating Shared Value),” Isozaki said.

Beyond the premium shareholders will receive if the deal goes through, Blackmores will also pay a fully-franked special dividend of $3.34 per share immediately prior to the implementation of the takeover.

Further, Blackmores executive director and major shareholder Marcus Blackmore - the son of the company’s founder Maurice Blackmore - has informed the company he will vote in favour of the Kirin takeover when the time comes.

The deal comes after Blackmores posted double-digit growth in underlying profit and revenue in China, helping boost its bottom line to $30.6 million in FY22.

The Australian and New Zealand business delivered 7 per cent underlying EBIT growth to $43.1 million despite revenue increasing just 2.7 per cent to $288.2 million.