Japan & USA: Asahi Group on the hunt for acquisition targets in the US and elsewhere

Japan's Asahi Group Holdings is on the hunt for acquisition targets in the United States and elsewhere to quadruple overseas sales of its flagship Super Dry beer by 2030, its chief executive was quoted as saying by Reuters on February 26.

The beverage giant took a step toward that goal last month when it said it was buying Wisconsin-based Octopi Brewing, which will allow it to manufacture Super Dry in the U.S. rather than importing the beer from its European factories.

For the time being, the company is looking at merger and acquisitions opportunities in emerging markets in Africa, Asia and South America, Asahi President Atsushi Katsuki said, citing an absence of good U.S. targets.

Katsuki acknowledged investor concern that Asahi did not have much of a presence in the U.S.

"The U.S. would be the largest market for us in terms of beer and it's the only growing market among developed countries in terms of population," he said.

But while U.S. market is huge in terms of potential growth, more takeovers by Asahi there were unlikely to happen until next year at the earliest, he added.

North America accounts for just 6% of Super Dry's overseas sales, which currently stand at about 2 million hectolitres.

Asahi is among a number of Japanese companies seeking growth in the U.S.

Spurred on by the need to seek growth outside of their shrinking, aging home market, Japanese firms went on an overseas buying spree worth ¥8.1 trillion ($54 billion) last year, the most since 2019, according to LSEG data.

"It's no longer an environment where acquisitions are made simply for economic value. Sometimes it's necessary for a company to take on a little too much in order to transform itself," Katsuki said.

Nippon Steel, for example, plans to buy U.S. Steel for $15 billion but has encountered opposition from U.S. lawmakers and U.S. presidential hopeful Donald Trump.

Katsuki said the protectionist pushback appeared to have emerged because U.S. Steel was a "rust belt" symbol, and the merger would likely succeed in the end. But the uncertainty that a reelection of Trump might bring meant that it was probably better to lock in refinancing of debt sooner than later.

Asahi has prioritized paying down debt since its last major overseas acquisitions — the Australian operations of Anheuser-Busch InBev in 2020 and the Central and Eastern European businesses of SABMiller in 2017.

The company's shares have risen 12% over the past 12 months, underperforming a 43% surge in the benchmark 225-issue Nikkei average, which closed at a fresh record high on Monday, February 26.

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