Heineken agrees to buy Brasil Kirin

  • Heineken agrees to buy Brasil Kirin

Heineken agrees to buy Brasil Kirin

Kirin has agreed to sell its brewing business in Brazil to Heineken, which will make the Dutch-based global brewer the second largest in the country after Anheuser-Busch InBev. It has a particularly strong presence in the North and North East, where Heineken now has less exposure.

Heineken's first venture in Brazilian beer market was in 2010 with the acquisition of the beer operations of Fomento Económico Mexicano.

Heinken stock was up 0.39% in Monday morning trading in Amsterdam to change hands at €73.91, extending the gain to 3.85% over the past three months.

The Brazilian manufacturer's beer portfolio holds a 9% share of the Brazilian beer market with mainstream brands such as Schin and Devassa as well as specialty brands Baden Baden and Eisenbahn.

Heineken expects that the transaction provide significant cost synergies, through production efficiencies including logistics, brewery optimisation and optimisation of selling, general and administrative expenditures.

For Kirin it marks a departure from the Brazilian market, having paid some $3.9 billion in 2011 for 12 breweries, a business which has subsequently lost market share and seen raw materials costs rise due to a weak currency. Its revenue for the period was $1.18bn, with an operating loss before amortisation of goodwill of about $84m.

The new deal is expected to increase Heineken's scale across Brazil and strengthen its brand portfolio.

Brazil's economy appears set to enter a third year of recession in 2017, but Heineken said that its beer market was attractive in the longer term, with a premium segment growing faster than the market as a whole.