Heineken in discussions to acquire Kirin's Brazilian beer business

Company - Himanshu Gill - Jan 23,2017

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heineken in discussions to acquire kirins brazilian beer business

Heineken, world’s second largest brewer, is in negotiations with Japanese brewer Kirin Holdings to buy its beer businesses in Brazil.

As per the initial reports, the Dutch brewer could pay up to $870 million for Kirin, which is far less than the $4 billion it was valued at in 2011.

The deal comes around at the same time when Heineken closes in on a separate deal for UK pub operator Punch Taverns. It agreed on to pay around $500 million to acquire 2,000 Punch Taverns pubs.

Tokyo-based Kirin confirmed the discussions but didn’t make a comment on the price of the deal. It said that it is focusing on expanding in Brazil, but needs alternatives such as strategic partnership or sale.

Brazil is the third-largest beer market in the world, but recently is hit by an economic slowdown amid consumer slump and rising inflation.

Currently, the Brazilian market is dominated by Anheuser Busch-InBev NV. However, combining Kirin’s 12 percent share with Heineken’s share of 7 percent would bring the Dutch company closer to AB InBev that controls almost two-third of the market.

Kirin has largely been engaged in a non-profitable business, providing heavy discounts in the South American country, where it expects to post a record 9.5 billion yen loss for 2016.

Heineken shares rose up by 0.2 percent to 70.78 euros at in Amsterdam after the announcement, while Kirin rose by 1.3 percent in Tokyo, as compared with a 0.4 percent gain for the benchmark Topix Index.

Heineken is making efforts to expand as it is striving to keep up with the industry’s pace since AB InBev’s $100 billion takeover of SABMiller last year. It is also one of the seven companies that have registered to bid for a stake in Saigon Beer Alcohol Beverage Corp. or Sabeco, the largest brewer in Vietnam.