Brazil judge orders temporary suspension of US$2.53B deal that would give Japan's Kirin Holdings a controlling stake in Brazilian beer producer Schincariol; injunction request claimed the transaction ignored shareholders' rights of first refusal

Cindy Allen

SAO PAULO , August 5, 2011 (Associated Press) – A judge has ordered the temporary suspension of a $2.53 billion deal that would give Japan's Kirin Holdings Co. a controlling stake in Brazilian beer producer Schincariol.

In a court ruling obtained Friday by The Associated Press, Judge Juliana Bicudo accepted the request for an injunction against the transaction filed by Schincariol minority shareholders Gilberto, Daniela and Jose Augusto Schincariol. The three siblings own 49.55 percent of the company's shares.

Under the deal announced earlier this week, Kirin was to acquire the 50.45 percent stake in the beer maker controlled by brothers Alexandre and Adriano Schincariol, who are cousins of the three minority shareholders.

According to the injunction request, the transaction ignored the rights of first offer and first refusal to which shareholders are entitled.

Cristiano Zanin Martins, the attorney for the minority shareholders, has said his clients have the wherewithal to match Kirin's bid.

In her ruling Judge Bicudo said Alexandre and Adriano Schincariol must deliver all the documents pertaining to the deal so she can decide its legality. She's expected to announce her decision in 30 days.

The attorneys of the two majority shareholders said they would not comment on Bicudo's ruling.

The deal with Kirin would be one of the largest overseas takeovers by a Japanese company this year and would advance Kirin's efforts to find new growth overseas to offset a shrinking population at home.

Kirin aims to generate 30 percent of its sales and profits from outside Japan by 2015. In 2009, it bought full control of major Australian brewer Lion Nathan Ltd. and almost half of San Miguel Brewery Inc. of the Philippines.

With Schincariol, Kirin hopes to gain a foothold into South America's biggest economy, where the beer and soft drink markets are worth an estimated 3 trillion yen ($38.8 billion) each.

Schincariol is the second-largest beer producer in Brazil, known for brands such as Nova Schin, Devassa and Bem Loura. It also ranks third in the country's carbonated soft-drinks market.

It owns 13 factories and a nationwide distribution network in Brazil.

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