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Asahi buys 19.9% stake in Elders.

Asahi buys 19.9% stake in Elders

Officials of Elders IXL Ltd. last week announced plans for an alliance with Japan's Asahi Breweries Ltd. that is hoped to provide the needed impetus to make the Elders a more competitive player in the world market.

Elders' parent company, Harlin Holding Pty. disclosed plans to sell approximately 19.9 percent of its 55 percent holdings in Elders to Asahi, according to a report in The Wall Street Journal. The transaction value was estimated at approximately $793.9 million.

Analysts familiar with the deal, said the sale will help Elders take some pressure off of its financially troubled parent company, which is burdened by about A$3 billion of debt. The deal also gives the world's fourth largest brewer a place in the Japanese beer market.

Currently, Elders is in the midst of a corporate overhaul that saw the sale of the company's natural resources, agribusiness and finance interests. The brewer also plans to change its name to Foster's Brewing Group Ltd.

Assuming the transaction is approved by all parties. Harlin's hold in Elders will drop from 55 percent to 35 percent. However, Asahi's purchase will not completely erase Harlin's debt, and analysts don't foresee the company fully covering its interest payments on the outstanding debt. Before the Asahi deal, analysts explained, Harlin saw an annual shortfall of nearly A$150 million, now that number could be halved.

Further, industry voices said that unless Harlin receives some kind of break on its interest bill, the holding company may be forced to sell more of its Elders stake.

Elders' chairman, John Elliott, had been rumored to be looking for partners to relieve Harlin's financial predicament, and there had been speculation that Molson Cos. of Canada, which already has a licensing agreement with Elders in Canada, would purchase a piece of Elders. However, a source close to the Molson discussions, said the Asahi deal overrides any talks with the Canadian brewer. In fact, a Molson spokesperson said the company was "delighted" with the Asahi deal.

Asahi is expected appoint two directors to Elders board, which is slated to contain nine or 10 seats. Harlin should have three directors on hand.
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Title Annotation:Asahi Breweries Ltd., Elders IXL Ltd.
Publication:Modern Brewery Age
Date:Sep 24, 1990
Words:365
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