HONG KONG–Heineken N.V. HEINY, +1.24% Friday said it is selling its Chinese operations to a local brewer to focus on selling premium beer in world’s largest beer market by volume.
The deal comes after the world’s second-largest beer producer struggled to get the Chinese to buy its entry-level fare over more popular local brands. It also gives Heineken a significant foothold in what is forecast to be the biggest contributor to premium volume growth in the next five years.
Heineken said it will sell its Chinese operations to Hong Kong-listed China Resources Beer (Holdings) Co. Ltd., or CR Beer, for HK$2.4 billion (US$305.76 million) while picking up a minority stake in its holding company for HK$24.3 billion. Combined, the deal would entail an investment of HK$24.3 billion in the Chinese business by the Dutch brewer, a statement said.
CR Beer makes and sells Snow-branded beer in China, one of the top selling beers in the world although it is not widely available outside of the country. Its parent will also buy a 0.9% stake, or 5.2 million shares, in Heineken for 464 million euros (US$4.22 billion) or EUR88.66 a share.
Heineken will license its namesake brand in China to CR Beer on a long-term basis while the Chinese firm will be able to use the Dutch brewer’s global network to sell its Snow brand of beers, the statement said.
"CR Beer’s deep understanding of the local market, its scale and best-in-class distribution network will create a winning combination in the growing premium beer segment in China," Heineken chief executive officer Jean-François van Boxmeersaid said.
Sales of premium and lucrative beer categories such as Weissbier, Weizen, wheat beer and stout have improved in China, according to Euromonitor International. This is amid slower growth with 2017 being the fourth successive year of decline in terms of total volumes sold, the research firm said.
-Write to Kenan Machado at [email protected]
Corrections & Amplifications
This item was corrected on August 3, 2018 at 0205 GMT to reflect that Heineken said Friday, not Thursday, its selling its Chinese operations to a local brewer.
Heineken N.V. said on Friday it is selling its Chinese operations to a local brewer. "Heineken Selling Chinese Operations to CR Beer," at 0147 GMT, misstated the day the announcement was made in the first paragraph.
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