Japanese beer and soft drink manufacturer Kirin Holdings said on Monday that it had called off merger talks with Suntory Holdings due to differences over governance and a merger ratio.

Kirin was pursuing negotiations with smaller rival Suntory to create a leading industry player in Asia, with sales of more than 400 billion dollars.

A Suntory executive said on the condition of anonymity that Suntory wanted a ratio of around 0.9 per cent of a share for each Kirin share in the merged company.

Suntory, which is owned by Saji family, said there had been a difference of opinion over the business model of the new company.

Commenting on the issue, Daiwa SB Investments Ltd’s chief portfolio manager Koichi Ogawa said, “Suntory is playing hardball with Kirin as it knows Kirin wants the merger.”

In the after-hours trading, shares in Kirin slipped 2.5 per cent to 1,407 yen-a-share on the Tokyo Stock Exchange.