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Heineken has announced plans to invest in a new Israeli beer and beverage company. The brewer announced last Friday (31 December) that it has signed a memorandum of understanding with the controlling shareholders of Tempo Beer Industries (TBI) to acquire 40% of the shares of the new company.

As part of the agreement Heineken will transfer its current 17.8%-stake in TBI and will make an additional cash payment of US$14.5m (€11m). TBI will transfer all its beer, soft drink, fruit juice and water activities to the new company and will own the remaining 60% of the shares. The agreement also covers a licence for the local production and marketing of the Heineken brand by the new company.

The investment fits well with Heineken's strategy of combining its international premium brand Heineken with strong local brands, the company said last week. The transaction will be funded from available cash resources. The investment is value-enhancing on a Net Present Value basis and will contribute to the net profit of Heineken from 2005 onwards. The transaction is subject to regulatory approvals.

In a statement, Jean Francois van Boxmeer, member of the executive board of Heineken, said: "This investment extends our presence in the Israeli beer market. Local production of Heineken will accelerate the growth of the brand that has already captured a 9%-share of the beer market since its introduction in the early 90's."

Tempo is based in Netanya, on the Mediterranean coast, and has a 50%-market share in the Israeli beer market. Its leading beer brands are Goldstar and Maccabi. Currently, TBI imports and distributes Heineken as well as Wieckse Witte, Affligem and Murphy.

In 2003 TBI sold 0.5m hectolitres of beer and 1.8m hectolitres of soft drinks, juices and mineral water. The Israeli beer market has a size of 1m hectolitres and a per capita consumption of 16 litres.


Sectors: Beer & cider, Soft drinks

Companies: Heineken

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