Heineken has reached an agreement with Canadian brewer Molson who announced today its acquisition of Kaiser in Brazil. Heineken will enter into a partnership with Molson by taking a 20% participation in the new brewery group that Molson will form by merging Kaiser and Bavaria. This merger creates a strong second player in the Brazilian beer market with a combined market share of approximately 18%.
Part of the agreement is a licensing contract for brewing Heineken in Brazil as the premium beer of the portfolio. Heineken beer will benefit from the strength and the extended distribution of the new brewery group. Furthermore, Heineken will extend its current distribution contract with Molson in Canada to a 10-year contract.
The total value of the transaction for Heineken amounts to approximately USD 220 million. This includes Heineken's current stake of 14.2% in Kaiser and a USD 115 million cash payment. This amount will be financed from the available resources.
Both Heineken and Molson view this agreement as the first step towards a successful cooperation in the Brazilian beer market. Brazil is the world's fourth largest beer market with an eight-year average growth rate of 6.9% and a three-year average growth rate of 2.9%. The premium segment is relatively small but has strong future growth potential.
Heineken is very pleased by the intensified relationship with Molson. Anthony Ruys, the CEO designate of Heineken, said: "I am pleased that Molson and Heineken have been able to extend their excellent relationship in Canada to the Brazilian market. Molson is a professional partner with whom we have achieved a 24% growth for the Heineken brand in Canada in 2001. I am convinced that this partnership with Molson in Brazil will successfully expand our business and offers new growth opportunities for Molson and Heineken."
Molson is Canada's pre-eminent brewer with more than CAD 3.5 billion in annual sales. Founded in 1786, Molson is North America's oldest beer brand and a global brand name with products that include Molson Canadian, Molson Export, Molson Dry, Rickard's and the Brazilian beer brands Bavaria and Kaiser.
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