Asahi sues private equity funds over liquor purchase

Japanese brewing giant Asahi Holdings is taking legal action against private equity investors PEP and Unitas Capital, claiming they produced misleading financial information about the Independent Liquor business acquired in 2011 for $1.5 billion.

Independent Liquor NZ and Asahi Holdings Australia, both Japanese-registered subsidiaries of Asahi Group, will lodge their suit in the Australian Federal Court in Melbourne today, NBR ONLINE has learned.

The companies are seeking damages over claims that PEP and Unitas provided false accounts during the sale process, causing the buyers to overvalue Independent Liquor.

"This is not a case of poor due diligence but, rather, misleading and deceptive conduct," the source said.

Asahi still believes Independent to be "basically a good investment with excellent potential" and the action will not affect the business.

PEP and Unitas – then known as CCMP Asia Pacific – paid $1.3 billion to acquire Independent in 2006, with CCMP selling it to Asahi for $1.5 billion five years later.

Asahi, like its rivals Kirin and Suntory, have sought gowth outside Japan through acquisition of alcoholic and non-alcoholic beverage companies.

Independent Liquor, which is heavily dependent on pre-mixed spirit drinkss (RTDs), has ramped up beer production, including the launch of craft and tap brews as well as international brands such as Carlsberg and Kingfisher under licence.

The company also formed a spirits division and began importing major whisky and other brands.

New sale of liquor legislation targeted RTD “alcopops” with moves to limit their alcoholic content in an attempt to stop binge drinking among young people.

In Australia, Independent's Melbourne brewery began production of Asahi Super Dry, which had previously been made by Foster’s under licence,.

Also in Australia, Independent was hit by a slump in sales of following the federal government's decision to hike the excise on “alcopops,” forcing shelf prices up by as much as 30%.

A corporate profile published last year to coincide with Independent’s 25th year since it was founded by Michael Erceg showed annual sales of $300 million in New Zealand as well as a thriving export business to the Pacific and North America.

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9 Comments & Questions

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What !
A private equity firm fudging the figures.
No way !

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Potential $200 - 300M hit for the privatey equity fund if the allegations are upheld. Time to jump ship shareholders.

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This is more like a case of Asahi failing to conduct 'due diligence' on the potential purchase before committing themselves, and now are crying foul. International corporate bullying of a perceived small nations businesses.

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So Nevil, who were the investment banks and accounting firms involved? name names

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Since when banks carry out financial due diligence? that's why you hire accountants - what I want to know is who carried out the vendor DD

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The grins on the dials of PEP and Unitas Capital, would have been nowhere as wide as the one on Rupert Murdoch's, when he flicked off Ansett Airlines to Brierley.

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Or flicked off the 50% to Air New Zealand with Brieley cronies on the Board

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The grins were even bigger on Toll Australia's faces when they sold NZ rail back to the government. Surely the NZ govt. should be taking legal action against Toll for fudging the books! Oh that's right, the then government was fully aware it was not worth anything like what they paid for it and were just plan stupid? No point trying to sue our own government as we will pay yet again for their stupidity.

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Please don't dig up the past. I thought the lipstick on the pig was real.

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