Kirin Holdings to Complete Acquisition of Fancl: A $2.5 Billion Shake-up in the Health and Wellness Industry

Japan's Kirin Holdings has amassed enough equity to complete its takeover of health supplement maker Fancl, the company's new president has announced. The move will give Kirin the upper hand in a bid with an overseas fund and further boost the company's transformation into the healthcare sector. Mr Takeshi Tanaka, who took the company's top job in March this year, expressed expectations of declaring victory when the takeover bid closes on Wednesday. However, due to Mitsubishi Motors' acquisition of Kirin, financial regulators had to postpone the offer until September 11. Alpha Management has raised its stake in the French bank to about 10 per cent.

As of August 29, 2023, the market value of Fancl has climbed to 364.1 billion yen, equivalent to about $2.52 billion. Mr. Takeshi Tanaka previously held leadership positions in Kirin Pharmaceuticals, a subsidiary of Kirin Pharmaceuticals, and Blackmores Limited, an internationally renowned vitamin manufacturer, which was successfully acquired in a transaction of US $1.2 billion during the year. Mr. Takeshi Tanaka's joining fully reflects our company's determination and actions to unswervingly promote business transformation and upgrading in the face of the severe challenges of the Japanese market contraction and the change of international consumer preferences.

The Fancl brand, known worldwide for its outstanding cleansing oils and nutritional supplements, is a good fit with Kirin's Health Sciences product line, which the Kirin Group is aiming to build into a new pillar industry alongside the alcohol and pharmaceutical businesses. The Group's strategic goal is to achieve annual revenue of 500 billion yen in this business segment, a five-fold increase compared to the previous year. However, Takeshi Tanaka, a senior executive of Kirin Group, made it clear that internal growth alone would be difficult to achieve this ambitious goal, and the group may need to accelerate its development through overseas acquisitions. "Our strategic focus is on potential partners with unique technologies, products and brands," he stressed. "Under the guidance of this strategy, the North American market, with its continued growth momentum and great potential, is the focus of our attention." Since joining Kirin Group in 1984, Takeshi Tanaka has witnessed the company's successful entry into the pharmaceutical sector with its advanced fermentation technology. He acknowledged that it would take time for the brand's image to change in the minds of consumers, especially in overseas markets, from alcohol products to drugs and health food.

In light of the high level of consumer concern and concern over the contamination of Kobayashi Pharmaceutical's red koji products, which have led to dozens of tragic deaths in Japan this year, this is not the right time to launch a supplement product. The incident not only cast a shadow over the century-old company, but also led to the resignation of two senior executives, a sharp drop in the company's share price and a strong public call to strengthen the supervision of health food products marketed as good for health. Mr. Tanaka made it clear that Kirin has a sound quality control system to effectively reduce the risks associated with the production of supplements and other products with a relatively short history of development. "We have a well-developed process in place to ensure that all our products enjoy the same level of trust from consumers, regardless of the length of their development cycle," he stressed.

In the traditional beer and beverage business, Kirin continues to compete fiercely with Asahi Group Holdings and has introduced new brands, such as Suntory Holdings and Sapporo Holdings, to inject new competitive vitality into the domestic market. Market analysts have long predicted that the industry is bound to undergo a consolidation process in the future.

The possibility of an overseas acquisition came into sharper focus last week as Japanese retail giant Seven & i Holdings accepted a surprise takeover offer from Canada's Alimentation Couche-Tard. Mr Tanaka said Kirin would have to consider any serious offer it received. "We have to remember that the possibility is not zero at all. We need to demonstrate that all three of our main businesses are finding value in their own way, and we need to do that more effectively."