Suntory To Buy Japan Tobaccos Vending Businesses For 12 Billion

TOKYO -- Suntory Beverage & Food Ltd. said it will buy Japan Tobacco Inc.'s beverage vending businesses and two drink brands for about $1.2 billion. The companies said the deal is expected to close in July.

Japan Tobacco Inc. said in February that it would stop manufacturing its canned coffee and flavored water as it considered options for its massive vending machine operation that once sold them. | READ MORE

The Tokyo-based cigarette manufacturer, which sells the Camel and Winston brands outside the U.S., owns a majority stake in Japan Beverage Holdings Inc., which reportedly operates 264,000 beverage vending machines.

Suntory Beverage & Food will acquire Japan Tobacco's shares in Japan Beverage Holdings and JT AStar Co. Ltd., along with its Roots and Momono Tennensui brands.

Japan Tobacco's 26-year-old beverage manufacturing and sales unit being acquired by Suntory made about $426 million in the fiscal year ended Mar. 31, 2014. However, the company's profit margin has declined by double digits over the past two years.

Japan Tobacco's beverage businesses will make Suntory the second-biggest soft drink maker behind Coca-Cola. It will operate about 750,000 vending machines, or nearly a third of the entire Japanese market, according to news reports.

Suntory Holdings last year acquired U.S. spirits maker Beam for $16 billion. In 2009, it paid $3.8 billion for Orangina Schweppes.