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) --

Kirin Holdings

(KNBWY.PK) said Friday it will acquire liquor manufacturer


as its wholly owned subsidiary.

Kirin, Japan's top alcohol and soft beverage maker, said it will pay 11.1 billion yen, or $131.5 million at current exchange rate, in a stock-swap deal to acquire the 49.9% of Mercian it did not already own.

Under the terms of the deal, Kirin will pay 0.14 of its shares for each share of Mercian's. The deal is expected to become effective Dec. 1.

Pink sheet-traded shares of Kirin fell 0.8% Friday to $13.87.

Kirin picked up a 50.1% stake in Mercian in 2006 as part of its ongoing effort to expand and diversify its portfolio as demand for beer in Japan weakened.

Earlier this month Kirin downwardly revised its profit forecast for 2010 by 27% to account for a 6.5 billion yen, or $77 million, loss on Mercian's books.

Mercian booked the loss after announcing in May it had artificially inflated its profits over the course of several years.

Merger and acquisition action is no stranger to the international beer market.

Rumors have been circulating for some time that

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The Japanese beer market has contracted 16% since its peak in 1994, according to



-- Written by Miriam Marcus Reimer in New York.

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