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02/13/2017

Global Chess Moves: Heineken to Buy Kirin’s Brazil Biz for $704 Mil; Completes Punch Pub Purchase

Heineken has deal to significantly expand its Brazil footprint and be stronger competitor to AB InBev in world’s 3d largest beer mkt, about 118 mil bbls in 2015, it announced today.  Heineken will buy Kirin’s Brazil biz for approx $704 mil; with debt, price edges up over $1 bil.  It picks up 12 breweries and about 9 share, adding to 5 breweries and 10 share Heineken already has from FEMSA biz it bought in 2010.  AB InBev still has about 70 share in Brazil.  The company (Brasil Kirin) reported operating loss in 2016 and Kirin paid whopping $3.9 bil for it back in 2011.  Deal never worked out for Kirin, to put it mildly.  It took $1 bil impairment charge in 2015 as overall mkt went soft last few years.  “There are certain limitations to transforming Brasil Kirin into a sustainable and highly profitable business on its own,” Kirin said in statement. “None of the normal ratios work because it’s loss-making, but it’s a very attractive price,” understated Bernstein’s Trevor Stirling.  

Tho it still significantly trails ABI in share, Heineken likes long-term prospects for overall biz and premium growth in Brazil. Among the “compelling strategic benefits” of deal, Heineken cited: consolidates Heineken’s existing position in mkt; provides oppy to accelerate premiumization; builds scale to drive more growth; compliments Heineken’s current portfolio with addition of “well-established” Schin, Bavaria, Kaiser and other brands; increases Heineken’s exposure to developing mkts; and cost synergies, of course.  Brasil Kirin also has small soft drinks co, with about 2 share.

Separately, Heineken completed purchase, along with English private equity co Patron, of Punch Taverns, a big UK pub group with over 3,000 locations, for about $500 mil. Then too, Kirin turned around and bought majority stake in Myanmar’s Mandalay Brewery for about $4.3 mil, giving it 90 share of that country’s beer biz. That ain’t all.  Reports that Carlsberg may be considering an offer for Asahi’s 20% stake in Chinese brewer Tsingtao surfaced today too. Asahi has shifted sights to Europe with brands that fell out from ABI-SAB deal, and lost interest in its non-control stake.  Deal would make Carlsberg/Tsingtao stronger competitor to AB InBev in China (Carlsberg also has stake in another Chinese brewer, Chongqing).  Then too, Carlsberg, and other global brewers, still reviewing potential offers for Vietnamese breweries.  Finally, speculation continues about a future Heineken purchase of Molson Coors.  There may be questions (tho not likely answers) about that during Molson Coors and Heineken conference calls coming up this week as they announce their 2016 results.  Sources: Heineken announcement, Wall St Journal, iafrica.com, Reuters, Bloomberg, Burton Mail.

Publishing Info

  • Year: 2017
  • Volume: 19
  • Issue #: 28
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