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March 9, 2018

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China Resources Beer eyes Heineken China deal

CHINA Resources Beer (Holdings) Co Ltd is in talks to acquire Heineken NV’s China business in a deal that could be worth over US$1 billion, as the country’s largest brewer seeks new growth from premium brands, five people close to the discussions said. The negotiations come as global beer giants such as Heineken, AB InBev and Carlsberg are facing fierce competition from local rivals and each other in emerging markets, which have been touted as the growth engine for the world’s biggest brewers.

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

One of the sources 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 source said.

Details have not been finalized and talks could yet fall apart, the sources said. They declined to be identified as the information is not public.

Heineken, which entered China in 1983, 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, industry analysts say.

The Dutch brewer had a 0.5 percent share of the China market by volume in 2016, according to research firm Euromonitor International, while CR Beer took up more than a quarter.

Heineken sells its premium lagers Heineken, Tiger and Sol in China, along with cheaper local brands Anchor and Hainan Beer.

The company has invested millions of dollars in promoting Heineken as the global lager of choice, predominantly through sports, including soccer and Formula One. Next month will mark its second time as prime sponsor of the Chinese Grand Prix.


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