Kirin to pay $2.5 billion for Lion Nathan

Japan's second-largest beverage company is on the way to completing yet another earnings-accretive acquisition. But debt levels have soared, and targets are running out.

Lion Nathan's independent board committee has agreed key terms under which Kirin, Japan's largest diversified drinks conglomerate, will acquire the 54% of the Australian company it does not already own for $2.5 billion in cash, the two parties announced yesterday. Kirin will fund the acquisition from existing cash balances and its usual lenders.

The price amounts to A$12.22 ($8.72) per share, which represents a premium of 47.1% to Lion Nathan's closing share price of A$8.31 on the Australian Securities Exchange on April 22; a 52.9% premium to the volume-weighted ...