TOKYO: Japan’s Kirin Holdings has secured enough shares to take over supplement maker Fancl, its new president says, overcoming rival buying by an overseas fund and furthering the beermaker’s transition into healthcare.

Takeshi Minakata, who rose to the top role in the company in March, said he wanted to declare victory when Kirin’s tender offer was due to close on Wednesday, but financial regulations forced an extension to Sept 11 after Hong Kong-based MY.Alpha Management lifted its stake in Fancl to around 10%.

“We are confident about it,” Minakata told Reuters on Wednesday.

“It’s a bit of a shame that investors will have to wait another 10 days, but our stance hasn’t changed, nor the money amount, and we believe the Kirin group is the best partner for Fancl.”

As of yesterday, Fancl had a market value of 364.1 billion yen or about US$2.52bil.

With previous roles heading Kirin’s drug subsidiary and vitamin maker Blackmores Ltd, purchased in 2023 for US$1.2bil, Minakata’s accession signalled a resolve to pivot from alcohol businesses that face shrinking markets in Japan and shifting consumer tastes overseas.

Kirin in June launched a 220 billion yen tender offer for the roughly 70% of Fancl it did not already own.

Kirin later extended the tender period and raised its offer amid continued share purchases by MY.Alpha.

MY.Alpha, which has managed the Asian hedge fund business of York Capital Management Global Advisors, did not reply to a request for comment on its investment strategy in Fancl.

Fancl, known for its skin cleansing oils and nutritional additives, fits into a health science portfolio that Kirin aims to grow into a new pillar of the group along with alcohol and pharma.

The company aims to expand the unit’s annual revenue to 500 billion yen, about five-fold last year’s tally.

But organic growth will not be enough to get there, likely necessitating more overseas acquisitions, Minakata said.

“We are naturally aiming for companies with a certain level of unique technology, products and brands,” he said.

“In that sense, North America is a big market that is still growing significantly. I think it has great potential.”

Minakata joined Kirin in 1984, two years after the company leveraged its fermentation know-how to make its first foray into the pharma sector.

He acknowledged it may take time for consumers, particularly those overseas, to associate the Kirin brand with drugs and health food rather than alcohol.

The timing for the push into supplements is hardly ideal given broad consumer concerns following a tainted red-yeast product from Kobayashi Pharmaceutical that was linked to dozens of deaths in Japan this year.

The scandal led to the resignation of two top executives of the 105-year-old company, a plunge in its shares and calls for increased scrutiny of so-called functional foods with health-benefit claims.

Minakata said Kirin has sufficient quality controls to allay the risk of venturing into supplements and other products that have shorter scientific track records.

“We have a process in place to earn the same level of trust for all our products, regardless of how long or short the development period is,” he said.

In its legacy beer and beverage businesses, Kirin remains in fierce competition with Asahi Group Holdings, Suntory Holdings, and Sapporo Holdings for the same domestic market. Analysts have long said the sector is due for consolidation.

 - Reuters