Asahi claims it received false data over firm

Japanese brewer Asahi has accused the former private-equity owners of New Zealand's Independent Liquor of inflating the Kiwi company's earnings figures by tens of millions of dollars, when Asahi bought it two years ago.

Asahi and Independent Liquor filed legal action in Melbourne yesterday against Pacific Equity Partners and Unitas Capital, alleging they engaged in "misleading and deceptive conduct" during the due diligence and sales process.

"We are seeking damages for the difference between the purchase price and the real value of the Independent Liquor business at completion," said an Asahi spokesperson.

Asahi paid just over $1.5 billion for Independent's holding company, a price which some analysts believed was on the high side.

The spokesperson said Asahi believed the price it paid was fair based on what it had been told.

But the firm later found "we were given false information which meant that the real value of the IL business was lower than what we had valued the business".

In particular, it found significant differences in the ebitda (earnings before interest, tax, depreciation and amortisation) data.

Asahi claims PEP and Unitas estimated Independent's "actual LTM normalised ebitda" as of June 2011 was about NZ$118 million and would be around NZ$124.6m at September 2011.

The actual numbers were around NZ$92m and NZ$83m respectively, Asahi says.

Asked whether Independent had been performing to expectations, the spokesperson said it was not Asahi's policy to disclose the performance of its subsidiaries.

"What we can say is that Asahi remains committed to its businesses in Oceania, including the IL business."

In a joint statement, PEP and Unitas said the allegations were "completely untrue and unfounded" and they would seek their own damages in New Zealand.

The statement said Asahi and its experts were given full access to information during three months of due diligence.

"The approach taken by Asahi is a breach of the sale contract. The sellers intend instituting legal proceedings and seeking damages in the New Zealand courts."

The two private-equity firms bought Independent in 2006 for $1.25b, giving each a 43.9 per cent stake. The other shareholder, Lynne Erceg - widow of Independent's late founder Michael Erceg - is not named in Asahi's lawsuit.

Independent Liquor made its name with RTDs or "alco-pops", quickly becoming a market leader in Australasia, but it also makes and distributes other drinks, including the popular Boundary Road beer brand. It brews Asahi's Super Dry beer brand and makes a range of beers and spirit brands under licence.

Independent was Asahi's second Kiwi beverage acquisition in 2011. The Japanese brewer also bought juice company Charlie's, reflecting a move by Japanese companies to look for growth overseas to offset shrinking markets at home. Fairfax NZ

Contact Catherine Harris
Business reporter

The Dominion Post