Heineken is reportedly in talks to sell its Chinese business to China Resources Beer (CR Beer), according to Reuters.
It is believed that any deal would be worth more than $1 billion, with CR Beer thought to be seeking to improve the premium end of its portfolio. CR Beer’s best-known brand, Snow, is the world’s largest selling beer – driven in the most part by domestic sales. Indeed, China is the world’s largest beer market in volume, as the country’s population draws closer to the 1.4 billion mark.
But Heineken would surely be hesitant to sell out of such a lucrative market, even in the face of rising competition from the likes of Anheuser-Busch and Carlsberg.
The Dutch brewer, along with its peers, has concentrated recent efforts on improving its performance in Asia. In 2016, Heineken agreed to buy a brewery in Vietnam from Carlsberg, and has been perennially linked with a move for Habeco and Sabeco – the Vietnamese beer companies being privatised by the country’s government.
Outside Asia, the beer giant has begun construction of a $100 million brewery in Mozambique and inaugurated a $500 million renewable energy-powered plant in Chihuahua, Mexico in recent times.
According to Reuters, sources close to the discussions “said the deal between CR Beer and Heineken would most likely include three breweries – in Guangdong, Hainan and Zhejiang provinces – Heineken’s distribution operation and its brands in China”.
“The two brewers have discussed a share-swap as part of the transaction,” the press agency added, quoting the sources, but no financial terms have been finalised.
Shares in CR Beer jumped by nearly 15% after Reuters reported the rumoured talks, though CR Beer moved quickly to dispel the speculation.
“The company and its controlling shareholder regularly explore and engage in commercial and strategic discussions pertaining to possible transactions which have the common objective of enhancing and unlocking value for the benefit of its shareholders as a whole,” CR Beer said in a stock exchange filing on Friday.
“The board confirms that it is not aware of any reasons that caused the increases in price and trading volume of the shares of the Company today or of any information which must be announced to avoid a false market in the company’s securities.”
Both companies have since declined to make further comment on the issue.
© FoodBev Media Ltd 2018