Heineken agrees to sell China operation to CR Beer in $3.1 billion…

HONG KONG (Reuters) – Heineken NV (HEIN.AS) said on Friday it has agreed to sell its China operations and take a 40 percent stake in a firm controlling the country’s biggest beer maker China Resources Beer Co Ltd (0291.HK) in a $3.1 billion deal.

FILE PHOTO: Heineken beers are seen on a production line at the Heineken brewery in Jacarei, Brazil June 12, 2018. REUTERS/Paulo Whitaker/File Photo

The deal comes as global beer giants such as Heineken, AB InBev (ABI.BR) and Carlsberg (CARLb.CO) face fierce competition in emerging markets, touted as the growth engine for the world’s biggest brewers.

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Under the deal, Heineken will inject its operating assets including three breweries in China into CR Beer for HK$2.4 billion ($305.8 million), while China Resources Enterprise, which owns CR Beer, will acquire 0.9 percent of Heineken shares for 464 million euros ($537.5 million).

Combined, these transactions will result in a net investment of 1.9 billion euros ($2.2 billion) by Heineken, the two firms said in a joint statement.

Reuters reported in March that China Resources Beer was in talks to acquire Heineken’s China business.

Heineken entered China in 1983 but has struggled to set up a strong distribution network and to make a mark with its flagship Heineken lager, which lags far behind AB InBev’s Budweiser in the premium market, analysts say.

China is the world’s biggest beer market by volume. CR Beer’s biggest brand, Snow, is the world’s top-selling beer, but is almost exclusively sold in China.

(This story has been refiled to correct U.S. dollar conversion in paragraph three and investment amount in second bullet point.)

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