The two Japanese drink companies have combined sales that spill over the $41bn mark so a merger would create one of the largest food and beverage companies in the world. The companies would be fifth in the pecking order of the biggest selling food and beverage groups, just behind Kraft Foods and Pepsico.
The Nikkei business daily says Kirin and Suntory are in merger talks and plan to approach the Japanese competition authorities as early as this week.
No agreement reached
Following the first newspaper reports, Kirin released a statement saying that no agreement has been reached. However, Kirin said it has collaborated with Suntory in the past in areas such as distribution and procurement.
Kirin is the larger of the two companies and the biggest Japanese food and beverage firm. It has acquired a number of firms in Asia and Australia in recent years and most recently, bought out the 54 percent of Australian brewer Lion Nathan that it did not already own for $2.5bn.
Meanwhile, its smaller un-listed rival Suntory has also been on the acquisition trail having bought Danone’s Frucor juice business last year for €600m.
Positive market reaction
Although the reports of a possible merger have not been confirmed, the stock market reacted positively, with shares in Kirin and other brewers rising sharply.
JP Morgan analyst Naomi Takagi said: “If a merger is realized, that would give them the market share to take leadership in pricing and help their soft drinks businesses -- a chronic weak spot in an ultra-competitive market”.
However, even if the two companies do agree to a merger, it is far from certain that a deal will go though. With a combined market share of 50 per cent in the domestic beer market, the competition authorities will pay close attention to any proposals.