Japan's Otsuka Takes Stake of Alma

Source from http://online.wsj.com/article/SB121199901949126765.html?mod=googlenews_wsj

Closely held Japanese drug, food and drink maker Otsuka Pharmaceutical Co. said Wednesday it will pay about $1.2 billion to buy a 49% stake in Alma SA, the maker of Cristaline, France's biggest-selling still-water brand by volume.

The move by Tokyo-based Otsuka -- buying part of a stake formerly held by Groupe Castel, France's biggest wine producer by volume -- is the latest in a series of deals struck by Japanese food and beverage suppliers to expand overseas.

Seen as something of an upstart within the bottled-water industry, Cristaline has surpassed its rivals in sales volumes since it was started in the early 1990s by Castel's now 81-year-old founder, Pierre Castel, and long-term business partner Pierre Papillaud, despite a relatively subdued marketing presence.

Under the terms of Castel's exit from water, Mr. Papillaud will own the remaining 51% of the unlisted Alma. Otsuka is buying its stake from Rox , an investment company controlled by Mr. Papillaud.

Otsuka -- best known in Japan for its Pocari Sweat soft drink and Calorie Mate energy bars -- expects the Alma stake to give it a substantial presence in France and to create a foothold for a European sales network.

Brands controlled by Alma account for about one-quarter of France's bottled-water business.

Otsuka -- which makes and sells pharmaceuticals, medical equipment, food and cosmetics -- had sales of 928.48 billion yen ($8.9 billion) for the year ended in March, with a staff of about 5,300 employees. Overseas operations include Crystal Geyser mineral-water product lines in the U.S.

But while nearly 39% of overall sales comes from overseas business, Otsuka's food-and-drinks presence in Europe has been limited.

Paris-based Alma is home to several water brands, including the more upscale Chateldon, but Cristaline is by far the biggest seller. With annual sales of €783 million ($1.23 billion) in 2007, Alma operates 34 plants in Europe, mostly in France.

According to a 2005 Nestlé SA study, the French drink an average of 145 liters (38 gallons) of bottled water per person every year, just behind Italians, who lead the world with 189 liters, and ahead of Americans, who drink 89 liters.

Otsuka's move is unlikely to be the last foray by Japanese food and drink makers beyond home shores as the nation's aging population reduces domestic demand.

In December, Kirin Holdings Co. acquired Australian dairy-product and soft-drink maker National Foods Ltd. from San Miguel Corp. of the Philippines for 294 billion yen. In 2006, Japanese seasonings maker Ajinomoto Co. acquired Danone's Amoy Food business for about 27.3 billion yen, in a bid to strengthen overseas operations.