(Bloomberg) – Kirin Holdings Co. agreed to buy Australian vitamins maker Blackmores Ltd. for A$1.88 billion ($1.2 billion) in cash, as part of a push by the Japanese brewer into health products to reduce its reliance on beer.

Kirin won unanimous approval from the Australian company’s board with an offer of A$95 per share, and Blackmores will pay shareholders an A$3.34 special dividend. Altogether, the bid adds up to a 24% premium to Blackmores’ last closing price, the companies said in a statement Thursday. The shares surged 22% in early Sydney trading.

Kirin is expanding into health care as it sees increasing regulation of the alcoholic beverage industry. Kirin’s diversification away from beer stands in contrast to bigger rivals such as Anheuser-Busch InBev SA and Asahi Group Holdings Ltd., which are doubling down on alcohol and investing in higher-end businesses like craft beers.

“The acquisition of Blackmores will transform the scale” of Kirin’s health business, the brewer said in a statement. It “will expand access to Kirin’s ingredients to hundreds of millions of consumers in the Asia-Pacific region through Blackmores’ distribution network.”

The deal is expected to close in August, Kirin said. Marcus Blackmore, the son of the company’s founder and major shareholder with an 18% stake, will support the deal, Blackmores said.

Kirin shares dropped as much as 3% in Tokyo on Thursday after the announcement was made, the largest intraday fall since Feb. 15.

Kirin sells nutrients such as lactic acid bacteria to boost immunity and has a stake in Japan’s Fancl Corp., which sells skincare products and dietary supplements. The company aims to generate ¥500 billion ($3.7 billion) in sales from its health business over the next decade by starting contract manufacturing for pharmaceutical ingredients, expanding into food additives and supplement operations and acquiring new businesses.

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Blackmores vitamins are commonly found in Australian pharmacies and supermarkets and the company claims the country’s top natural health brand with its “BioCeuticals” brand. The company has a strong presence in Malaysia, Thailand, Indonesia, Vietnam, Singapore and China, and is actively expanding into India, Kirin said. It had sales of A$650 million in the year ended June 2022.

The deal “confirms the significant opportunity that lies ahead for our employees and other key stakeholders of Blackmores as both companies come together to combine their focus on growing Kirin’s health science business across the world,” Blackmores’ Chief Executive Officer Alastair Symington said in the statement.

The World Health Organization last year called for stricter rules on digital marketing that companies use to promote their products across borders and urged governments to set higher prices to discourage drinking.

(Adds latest share prices, company comment. An earlier version of this story corrected Marcus Blackmore’s role at the company.)

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