Heineken will acquire the assets of Brasil Kirin for approximately $704m, corresponding to an estimated enterprise value of $1.1bn once the two companies are consolidated, according to a statement by the firm.
Completion of the acquisition is subject to customary regulatory approvals and is expected in the first half of 2017, the specialty brewer said.
"This transaction marks a step-change in scale in an exciting beer market, building on our success to date in the premium segment and strengthening our platform for future growth,” said Jean-Francois van Boxmeer, chairman/CEO, Heineken.
“It reiterates our commitment to the Brazilian market and confidence in our ability to generate attractive returns over the long-term across all segments of the market.”
Brazil: Promising market opportunity
According to Canadean, with a population of more than 200 million people, Brazil ranked as the third largest global beer market with a volume of 118,451,339 barrels (139m hectolitres) in 2015.
Heineken has identified an opportunity in the premium beer segment, which has outperformed the broader beer market in recent years and has a relatively low share compared to other markets, Canadean found.
Heineken’s first venture into the Brazilian beer market was in 2010 with the acquisition of Fomento Económico Mexicano. Since then, Heineken has increased its market share to 10% with strong performance from the rollout of Amstel in the mainstream segment.
Today, Heineken currently operates five breweries in Brazil and has a strategic distribution partnership with Coca-Cola bottlers.
Brasil Kirin presence in Brazil
Brasil Kirin operates 12 production facilities with its own distribution network and has a strong presence in the North and North East of Brazil, where Heineken currently has less exposure.
The Brazilian manufacturer’s beer portfolio holds a 9% share of the Brazilian beer market with mainstream brands such as Schin and Devassa as well as specialty brands Baden Baden and Eisenbahn.
With the acquisition, Heineken will also own the Brazilian company’s soft drink portfolio, which has around a 2% market share, including the Itubaína brand.