THE NETHERLANDS: Heineken advances on three fronts
Heineken will book an extraordinary net profit of €73m ($77m) from the sale of its stake in Quilmes to the company's controlling shareholder, BAC. It also announced that it had terminated licence agreements allowing the Argentine brewer to brew Heineken, with the intention of transferring that licence to CCU as soon as possible.
The sale deal with BAC included an agreement to settle all disputes and claims outstanding in the pending arbitration between the two companies. The two companies have been engaged in an acrimonious dispute since Quilmes announced its $600m merger with the Brazilian brewer, AmBev, last May. Argentine authorities approved the Quilmes/AmBev deal on Monday.
Heineken acquired the 50% stake in Irsa from the privately-owned company, Schrorghuber. The other 50% in Irsa is owned by Quinenco, a privately-owned Chilean holding company. Thony Ruys, Heineken chief executive, said the deal would give Heineken a platform for expansion in both Chile and Argentina.
The recent activity further confirms Heineken's commitment to expanding in emerging markets and, in spite of the fact that Heineken has effectively lost out in the battle for Quilmes, the deal has been enthusiastically greeted in the City. "We like this deal - and we are reviewing our neutral recommendation (on Heineken)," said Stuart Price, analyst with WestLB Panmure, in a note.
"Not only does it settle the dispute between Heineken and Quilmes, but we believe that it has positive implications for Heineken's EV/EBITDA multiple because there is a positive relationship between country risk scores and valuation. Chile is one of the safer havens in Latin America - unlike Argentina. Increased exposure to Argentina suggests that the EV/EBITDA could fall by 1.0x EV/EBITDA; it remains static with increased exposure to Chile."
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