Published: Wed, February 15, 2017
Economy | By Melissa Porter

Heineken takes over Kirin Brasil in €1.025 billion deal

Drinks giant Heineken has announced it is to purchase Brasil Kirin Holding S.A., the Brazil-based arm of Japanese brewer Kirin Holdings Company. Brasil Kirin also owns a soft drinks business, which now holds a 2.1% share of the Brazilian market and includes the Itubaína brand.

On closing, it will become the second largest beer company in Brazil, with a stronger commercial platform from which to capture future profitable growth in the beer market.

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 transaction is expected to be dilutive to HEINEKEN's margin in 2017.

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.

The Dutch brewer plans to use the Brazilian distribution network to expand sales of Kaiser, Bavaria, Schin, Amstel and Devassa as "value brands".

It owns an extensive portfolio of beer brands and its share of the Brazilian beer market in 2015 was around 9%.

The total value of retail sales in the Brazilian beer market is projected to grow at a CARG 2.3% by 2020, according to Euromonitor, which places the country's total volume consumption behind the US and China, but higher than other beer traditional markets such as Germany and UK. Kirin said the unit made an operating loss of 284 million reais in 2016. "I look forward to welcoming our new colleagues from Brasil Kirin into HEINEKEN and working with them to take the combined business forward".

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