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from Breakingviews:

Starbucks avoids froth in $913 mln Japan buyout

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Starbucks Corp. has served up a grande Japanese buyout without any froth. The U.S. coffee chain is buying the 60.5 percent of its listed local unit that it doesn’t already own for around $913 million - a discount to its market value. Expiring franchise license agreements give Starbucks Corp. a rare chance to take full control of its business in the world’s third-largest economy on the cheap - as long as minority shareholders don’t put up a fight.

The deal has two parts. In the first step, Starbucks Corp.’s local partner, clothes-to-food brand operator Sazaby League, has agreed to hand over its 39.5 percent stake in the Japanese unit for 965 yen per share - a 31 percent discount to the closing price on Sept. 22. Public shareholders that own the remaining 21 percent of the shares will be given an opportunity to sell at 1465 yen per share - a skinny 4.7 percent premium. If both steps are completed, Starbucks Corp. will be able to delist Starbucks Coffee Japan.

Why is Starbucks Corp. able to call the shots? The key is licence agreements between the Seattle-based group and its local unit. The Japanese arm is only allowed to use the Starbucks name until 2021, with no option to renew. If no deal had been struck, Starbucks Corp. would have eventually had the right to buy back the Japanese stores at their fair market value, probably leaving shareholders worse off. Shares in Starbucks Coffee Japan rose to 1461 yen by mid-day Tokyo time on Sept. 24, suggesting there’s unlikely to be much resistance from public shareholders.

from Breakingviews:

SAB/Heineken could leap antitrust hurdles

By Robert Cole

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A $130 billion Anglo-Dutch beer monster could leap antitrust hurdles. Heineken has rebuffed a takeover approach from SABMiller as “non-actionable.” As you might expect from a combination of the world’s second- and third-biggest brewers, there are major competition concerns. But these could be fixed and the result would be an emerging markets titan. The rejection suggests family control of Heineken is the real sticking point.

from Breakingviews:

Coke investment reveals half-empty idea bottle

By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Coca-Cola’s latest investment reveals its idea bottle to be half empty. The $180 billion soda giant is paying $2.2 billion for 17 percent of Monster Beverage, a maker of trendy energy drinks. It goes to show how even a global powerhouse with significant distribution and marketing advantages can struggle to keep ahead of upstart rivals. At least Coke got the deal formula right.

from Breakingviews:

U.S. drought could spark economic water warfare

By Kevin Allison and Antony Currie

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The withering drought afflicting California and the southwest United States could spark economic warfare over water. Scarce rains have left large swaths of the country dry for, in some areas, several years. That’s happening as industries from beverages to semiconductors grow concerned about whether they will have adequate access to water in the future. For cities and states situated around the Great Lakes, as well as water technology firms, it presents a flood of opportunities.

from Breakingviews:

Diageo throws money at Indian empire-building

By Robert Cole and Una Galani

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Diageo is engaging in some expensive empire-building in India. An under-powered tender offer meant an earlier attempt to take control of Vijay Mallya’s United Spirits was only partially successful. Now the world’s biggest spirits maker has more than doubled the price it is willing to pay, offering $1.9 billion to raise its stake to 54.8 percent from 28.8 percent.

from Breakingviews:

AB InBev deserves premium-strength rating

By Robert Cole

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

AB InBev seems to pump as much cash as beer out of its business. It is the world’s biggest brewer, responsible for the Budweiser, Stella Artois and Corona brands, and even with a 2 percent annual decline in volume it poured 426 million hectolitres of grog in 2013. That’s enough to fill 17,000 Olympic-sized swimming pools.

from Breakingviews:

Suntory lives up to motto with $16 bln Beam bid

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

For a Japanese corporation, Suntory Holdings has an especially aggressive corporate slogan: “Yatte Minahare,” which roughly translates as “Go For It.” That sums up Suntory’s willingness to pay $16 billion, or a hefty 20 times EBITDA, for the U.S. distiller of Jim Beam, Maker’s Mark and other tipples. That number won’t be lost in translation for Diageo, Pernod Ricard or others who might also covet Beam.

from Breakingviews:

AB InBev moves fast to keep Mexico prize

By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Anheuser-Busch InBev is moving fast to save its Mexican ambitions. The world’s biggest brewer has rejigged its $20 billion buyout of Grupo Modelo two weeks after regulators objected, worrying that U.S. drinkers would suffer. In response, AB InBev is relinquishing any claim to Modelo’s beers stateside. That could prevent a long legal fight, while keeping the deal’s rationale largely intact.

from Breakingviews:

AB InBev setback may hasten last round of beer M&A

By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A deal setback for Anheuser-Busch InBev may ironically hasten a last round of consolidation in beer. The U.S. Department of Justice opposes AB InBev’s $20 billion plan to buy out the other half of Grupo Modelo, the Mexican group behind Corona. The world’s largest brewer may yet find a workable compromise. But if not, an obvious plan B exists: the long-rumoured takeout of SABMiller.

from Breakingviews:

Diageo’s M&A machine misfires with Jose Cuervo

By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The sun is setting on Diageo’s ambitions to be a big shot in tequila. A generous reading is that Diageo remains disciplined about deals. But letting Jose Cuervo go is a meaningful setback in the group’s largest market.

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