Suntory Holdings Ltd.’s founding family is trying to gain at least a one-third stake in the company that will be formed after Japan’s second-biggest drinks maker is sold to Kirin Holdings Co., two people familiar with the talks said.

By securing a stake of at least 33.4 percent, Suntory President Nobutada Saji and other family members would gain the power to veto major company decisions, including takeovers, in what would become the world’s fifth-biggest foodmaker by sales.

Japan’s two largest beverage makers announced they were in merger talks in July as a declining population and stagnant economy saps demand for their products at home. The Daily Yomiuri reported today the companies had agreed to the Suntory family holding more than a one-third stake. Suntory spokeswoman Naoko Tsuda and Kirin spokesman Jun Sato said there was no agreement and negotiations are continuing.

“Kirin may want this merger to go through even if it has to give the Suntory family veto power,” said Yasuhiro Matsumoto, an analyst at Shinsei Securities Co. in Tokyo. “It’s important for Kirin as it hopes the companies can complement each other in products and sales as they continue their expansion overseas.”

Uniting the century-old beverage makers would create a company that had 2008 sales of $42.6 billion, surpassing Coca- Cola Co.’s $31.9 billion and placing it behind Nestle SA, Unilever PLC, Kraft Foods Inc. and PepsiCo Inc.

Kirin rose 1.1 percent to 1,443 yen on the Tokyo Stock Exchange. The stock has gained 3.7 percent since the July 14 announcement that it was in talks to merge with Suntory, less than the 4.6 percent gain in the benchmark Topix index.

Foreign Markets

Japanese food and beverage makers have been expanding overseas to reduce their reliance on a population that’s forecast to shrink 10 percent by 2030.

Kirin last year agreed to pay A$3.5 billion ($3 billion) to take full ownership of Lion Nathan Ltd., Australia’s second- largest brewer. It also bought almost half of San Miguel Brewery Inc., partly funded by the sale of its holding in the Philippine brewer’s parent San Miguel Corp.

Suntory purchased European drinkmaker Orangina Schweppes from Blackstone Group LP and Lion Capital LLP in November for an undisclosed sum, and Groupe Danone SA’s Australia and New Zealand drinks business Frucor for more than 600 million euros ($822 million) in 2008.

Kirin’s domestic beer sales dropped 0.9 percent by volume last year and Japan soft-drink sales plunged 7 percent.

The brewer of Ichiban Shibori and Kirin Lager overtook Asahi Breweries Ltd. last year in Japanese beer sales for the first time in nine years, with 37.7 percent of shipments versus 37.5 percent. Suntory had 12.3 percent.

Suntory sells Brand’s health food, is the Japanese partner of Haagen-Dazs ice cream and owns a Pepsi bottling business in the U.S.

Suntory is 89 percent owned by members of the founding family. Saji’s grandfather, Shinjiro Torii, started the company in 1899 and began building Japan’s first whiskey distillery in Osaka prefecture in 1923.

In the 2003 movie “Lost in Translation,” Bill Murray plays an actor paid to come to Tokyo and appear in a commercial for Suntory whiskey.

(from:businessweek.com)