Why Heineken is buying Brasil Kirin - The data

Heineken has seen the premium segment grow in Brazil as mainstream beer has struggled

Heineken has seen the premium segment grow in Brazil as mainstream beer has struggled

Heineken has successfully completed its recently-confirmed discussions with Kirin Holdings, with the European brewer set to acquire Kirin's Brazilian operations for almost half the price the Japanese firm paid in 2011.

Heineken announced earlier today that it will buy Brasil Kirin for EUR664m (US$706.3m). The transaction comes almost six years after Kirin acquired Schincariol, then Brazil's second-largest brewer, for BRL2.35bn (then US$1.34bn).

The two companies confirmed last month that they had entered negotiations over a possible transaction in the country. The purchase, which is expected to complete by the end of June, will elevate Heineken to number two in Brazil's beer market with an estimated 20% share. The market is led by Anheuser-Busch InBev's AmBev unit, which accounts for around 66%.

The Japanese brewer has struggled in Brazil since making the Schincariol purchase. In 2015, Kirin reported its first-ever full-year loss, due to a JPY141.2bn (then US$1.2bn) impairment charge on the division.

Earlier today, Kirin said: "Considering various risks associated with the Brazilian economy and the stagnant and competitive situation in Brazil's beer and soft drinks markets, Kirin has come to the conclusion that there are certain limitations in transforming Brasil Kirin into a sustainable and highly-profitable business on its own."

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Heineken CEO Jean-Francois van Boxmeer added: "This transaction marks a step-change in scale in an exciting beer market, building on our success to date in the premium segment and strengthening our platform for future growth. It reiterates our commitment to the Brazilian market and confidence in our ability to generate attractive returns over the long-term across all segments of the market."

As well as its beer presence, Brasil Kirin operates in the soft drinks and bottled water categories, with is Itubaina brand leading its 2% share of the country's soft drinks market. Heineken, meanwhile, has a strategic distribution partnership in the country with the Coca-Cola system. It was not immediately clear what plans, if any, Heineken has for Brasil Kirin's non-beer assets.

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