Heineken Soaks Up Kirin’s Brazilian Beer Business For €664M

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After the massive merger of SABMiller and AB InBev closed in October, Heineken (AEX: HEIA) became the second-largest beer brand in terms of volume sales. Just like its much bigger rival, Heineken’s got a long history of building out its portfolio of recognizable beer labels through acquisition. Since 2015, the year AB InBev launched its bid for SABMiller, Heineken has acquired Jamaica’s Red Stripe, Slovenia’s Laško, and Lagunitas, a craft brewer based in California. Moreover, Heineken partnered last year with Patron Capital to buy UK pub operator Punch Taverns.

But Heineken’s hardly been alone over the past two years, which have registered a recovery in dealmaking among brewers, distributors and wholesalers. In order to pass regulatory scrutiny, the brewing behemoth has divested some of its assets in that time, including SABMiller’s stake in MillerCoors to secure US Department of Justice approval of the deal last year.

The strategic deal announced on Monday for Kirin’s operations in Brazil signals two things about Heineken’s approach going forward.

First, the deal will expand the footprint for its existing brands like Amstel in the world’s third-largest beer market by volume and will make Heineken the second-largest beer company in Brazil with control of Schin, a brand that caters to both mainstream and value markets in Brazil, and Kirin’s specialty brands Baden Baden and Eisenbahn.

In addition, the deal could indicate that Heineken plans to concede in the wider campaign to acquire a stake in Sabeco, Vietnam’s biggest beer maker. Other Asian brewers, including Kirin, Asahi and Singha have lodged their bids for the company in the neighborhood of $1.8 billion, according to Bloomberg. Since bidding began last year, seven suitors have lined up for the company.

Giving up that campaign, coupled with a doubling down in Brazil, suggests that Heineken is looking to consolidate and grow its presence in certain markets before expanding to others. Heineken currently operates five breweries in Brazil and has a distribution partnership with the Coca-Cola bottlers to help handle distribution there.

Article by Adam Putz – PitchBook

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