Heineken takes over Brasil Kirin

Heineken announced on Monday (13/02/2017) the acquisition of the group Brazil Kirin Holding S/A, the Brazilian branch of the Japanese group Kirin and one of the largest beer producers in Brazil, for €664 million.

The purchase makes of Heineken the second largest company of this segment in the country, with Ambev in the first place. The portfolio of brands owned by Brasil Kirin, include Schin, Baden Baden and Eisenbahn, which will all become property of the Dutch company.

This is the second major takeover from Heineken in Brazilian territory. In 2010, it purchased the Mexican company FEMSA, which also operates in Brazil, with the beers Kaiser, Bavaria, Xingu, Sol and Summer Draft.

The decision of Brasil Kirin to leave the Brazilian market comes in the wake of the financial recession and political instability in Brazil. Kirin claimed that the national market presented risks for the company and, in conjunction with a highly competitive market, the company had nowhere to grow.

The Japanese company arrived in Brazil after purchasing the Schincariol group in 2011, becoming the second-largest beer producer in the country, behind Ambev. In 2015, however, Brasil Kirin lost 25% of its share of the market and without the prospect of improvement, it decided to take Heineken`s offer in 2017.

Despite the financial and political turmoil Brazil is undergoing, Heineken remains optimistic regarding the future.

Whilst foreseeing better days in the economic situation of the country, in the long-term future, Heineken aims to invest in the premium beers category. This niche was not largely explored by Brasil Kirin, that had Schin, a beer with strong market share among working class drinkers, as its leading product.

Whether Heineken fulfills its growth vision within the Brazilian market remains to be seen, especially as the purchase of Brasil Kirin is yet to be approved by the country`s legislators, but both parties expect to finalize the deal in the first semester of 2017.

Credit Suisse worked on behalf of Heineken as a financial advisor on the transaction, whereas the firms Mundie Advogados and Davis Polks operated as the Legal Counsel. On Brasil Kirin`s side, Morgan Stanley acted as financial advisor, with Tozzini Freire Advogados and Allen & Overy Japan working as the Legal Counsel. 

CS