Heineken (AMS:HEIA) to Buy the Brazilian Beer Operations Of Kirin

The Netherlands-based brewing company Heineken (AMS:HEIA) is said to be in advanced talks with Kirin to acquire their business operations in Brazil. Though there is no confirmation yet from either of the businesses, but insiders are saying the deal is going to be worth $869 million or 100 billion yen. It was learned that the two businesses are close to signing the agreement for the beer operations of Kirin in the country.

Brazil, a Major Beer Producing and Consuming Country

This deal could happen this year itself, once the shareholders give their approval, of course. Brazil is an important market and is, in fact, the third largest market in the world for beer after China, and the United States. In 2013, Brazil brewed 13.46 million kiloliters of beer, the same as the Boeing Factory of Washington, the world’s most voluminous building.

However, beer consumption has slackened in Brazil in recent times, as people are spending less money now. Brazil is going through one of their worst economic situations. Growing competition from local brewers has also harmed the prospects of international brewers.

That is one reason why Kirin is looking for a buyer at this time. In fact, Kirin may end up making a loss even after the $869 million sale to Heineken.

It was the Brazilian financial newspaper Valor Economico that first published this story, but neither of the companies denied the report, spurring speculation that they might be very close to reaching an agreement. An official announcement may be made sometime in February. However, it was learned that Kirin is still in talks with other businesses at this time. But that could be just to negotiate and get a better deal from Heineken (AMS:HEIA).

The Operations of Brasil Kirin

The Brazilian unit, called Brasil Kirin, runs 12 factories in the country after it was created in 2011 following the company buying out the local brewing business Schincariol for $4 billion. Heineken, on the other hand, operates 165 breweries worldwide in more than 70 countries. Established in 1864, the company now employs about 76,000 people.

Brazil started brewing beer for the first time during the 1800s with the arrival of the German immigrants, who introduced the drink in the country. The first beer to be brewed here was the Bohemia, and this brand remains popular in Brazil to this day. However, pilsner is now the most popular brand in the country.