Heineken Is Taking On Anheuser-Busch With a New $1.1 Billion Deal

RealClear Staff


     Heineken’s on AB-InBev’s tail, as it’s in the midst of acquiring Kirin Holdings’s fiscally-bombed-out brewery in Brazil. This play will actually be a power move for them, as they’ll have more territory in the world’s third-largest mash market.

[Video: courtesy of Fortune]

Additionally, the green-glassed bottlers are sliding into the number-two spot in the South American country—a 19 percent share right under Anheuser-Busch InBev (BUD +0.33%). With Kirin’s debt, Heineken has agreed to pay the huge, sum total of $1.09 billion!

As for Kirin itself, things were not looking cool at all—KNBY, -5.83%. As they bow out of the Brazilian market, they’re probably reflecting on their ultimate loss of $3.9 billion from buying 12 breweries in 2011—market shares sizzled out; raw-material costs became too much (weak currency). But there were a number of seemingly difficult hoops for the Japanese outfit to jump through including economic risks and beer-and-soft-drink markets that were stale and competitive—this presented “limitations” in terms of Brasil Kirin’s profit goals. Their 2016 operating losses were some 284-million reais (a little over $91 million).

While’s Brazil’s looking at another recession, Heineken (HKHHF, -0.04%) is confident their beer market will sustain in the long term—fast-growing premium segments. Further, this acquisition up the brewer’s north-to-northeast Brazilian visibility, ignite sales of Heineken and Sol and yield cost savings. All this in addition to their 2010 acquisition of FEMSA’s five, Brazilian breweries.

[A Heineken empire | Source: TheInspirationRoom.com]

“None of the normal ratios work because it’s loss-making, but it’s a very attractive price,” Bernstein Research Beverage Analyst Trevor Stirling said.

Other analysts have added the deal is crucial, as it’ll give Heineken the boost they need to better rival AB-InBev. But the beer behemoth has pushed back with them dipping into Heineken’s turf via AB-InBev overthrowing SABMiller.

Upon a Brazilian anti-trust agency’s approval, Heineken will have their additional areas by roughly June 2017.



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