As part of its strategy to expand Latin American operations, Canadian brewer Molson purchased Brazil's Kaiser Monday for US$765m. Kaiser is Brazil's second largest brewer.

Combined with Molson's share in the Bavaria, the deal gives the Montreal-based company a 17.8 share in the world's fourth largest beer market.

Molson President and CEO Molson President Dan O'Neill said the deal will help compete against Brazilian beer giant AmBev, which holds 69.9% of the country's beer market.

"We believe that Kaiser's management team and the bottlers will provide considerable expertise in support of this transaction and contribute to the continued success of Molson's operations in Brazil," O'Neill said.

The transaction will lead to a merger between Kaiser and Bavaria, which Molson purchased in 2000. Heineken will come out of the merger with a 20% share of the new brewing company, after it contributed US$220m for the Kaiser purchase.

Molson will cover the rest of the purchase price with a combination of company stock and cash.

The deal includes the use of Coca-Cola distribution chain over a 10-year period.

Three quarters of Kaiser was held by a network of small Coca Cola distributors. Heineken owned a 14.2% share, and Coca Cola held 10.3%.