UPDATE 2-Asahi, Lotte in talks on South Korean brewer-Nikkei

TOKYO, Feb 6 - Japan's Asahi Breweries Ltd and South Korea's Lotte Group are in talks on a joint acquisition of No. 2 South Korean brewer Oriental Brewery Co for $1.1-$1.6 billion, the Nikkei business daily said.

Anheuser-Busch InBev NV, the world's largest brewer, owns a majority interest in Oriental Brewery and is planning to put it up for sale, possibly by the end of February, the Nikkei said.

Anheuser has informally asked Lotte to bid, but the companies have not yet reached an agreement on a price, it said.

Asahi and Lotte said they were not considering a bid at this time. A spokeswoman for Anheuser-Busch InBev in Belgium said she could not comment on what businesses the company may be considering for divestiture.

An Asahi spokesman said his firm had not been approached by either Anheuser-Busch or Lotte about buying Oriental Brewery.

Asahi, which makes the "Super Dry" beer brand, agreed in December to buy a 19.9 percent stake in China's Tsingtao Brewery from Anheuser-Busch InBev for $667 million.

It is also planning to buy Cadbury's Australian beverage business for 550 million pounds.

"Japanese beer makers have no choice but to search for growth overseas because the population at home is shrinking and demand is slowing," said Fumiyuki Nakanishi, manager at SMBC Friend Securities.

"Considering the weakness of the won, the timing is also good for a bid like this."

Asahi, which reported full-year earnings on Thursday, has said it would actively seek acquisition opportunities at home and overseas to grow outside Japan's shrinking beer market.

The Nikkei said Anheuser-Busch InBev would use proceeds from the sale of Oriental to help pay down debt InBev incurred in the 2008 acquisition of Anheuser-Busch.

The paper said that if Asahi and Lotte agreed on a joint acquisition of Oriental, Lotte would probably make the purchase alone initially, with Asahi acquiring an interest later.

The interest would probably be limited to 30 percent because the acquisition of a major South Korean firm by a Japanese company would likely to trigger a public backlash, the Nikkei said.

Oriental has about 40 percent of the South Korean beer market and has annual sales of about 62 billion yen. Asahi and Lotte already have close marketing ties, Nikkei said.

Hite Brewery Co Ltd is the leading South Korean brewer.

Asahi shares rose 3.2 percent to 1,372 yen, outperforming a 1.7 percent gain in the Nikkei average. ($1=91.4993 yen)