Kirin is headed for a proxy battle after British-based Independent Franchise Partners (IFP), which owns a 2% stake in Kirin, has called on it to shed investments in cosmetics and drugs and use the proceeds to buy treasury shares.

IFP has also offered to drop its demand provided Kirin make its board more independent by adding two directors it has proposed, and allow for a rigorous review of its business strategy.

"On balance, we consider IFP's position does not appear entirely unreasonable," Glass Lewis said in a report, made available to Reuters on Thursday ahead of Kirin's March 27 annual general meeting.

Kirin, which calls its expansion plan "Kirin Vision 2027", has said its investments in pharmaceuticals firm Kyowa Kirin Co Ltd and cosmetics company Fancl Corp were crucial given a decline in domestic beer consumption and a global shift towards healthier living.

But investors and analysts have mixed views, with many supporting Kirin's push outside of beer but also unsure whether the investments will pay off.

"We consider IFP has fairly highlighted that Kirin's early forays into this strategy have produced less than compelling results and highlighted a seemingly significant absence of necessary senior level expertise, particularly among the Company's independent directors," Glass Lewis said.

The names proposed by IFP are Nicholas Benes, a former investment banker who helped to draft Japan's corporate governance code, and pharmaceuticals executive Kanako Kikuchi.

Glass Lewis said shareholders should vote for those two nominees instead of Noriko Shiono and Hiroyuki Yanagi, who are among those backed by the company.

(Reporting by Ritsuko Ando; editing by Jason Neely and Susan Fenton)