Heineken in advanced talks to buy Brazilian unit of Japan's Kirin Holdings

Dutch brewer Heineken NV is in advanced talks to acquire the Brazilian unit of Japanese rival Kirin Holdings Co Ltd, Brazilian financial newspaper Valor Economico today reported, citing sources familiar with the talks.

A deal negotiated at around $2 billion is expected to be announced as early as February, the report said.

Kirin had acquired Brazilian beer and soft drinks maker Schincariol in two stages in 2011 for $3.96 billion and later renamed it Brazil Kirin.

Founded in 1939 by the son of Italian immigrants, Schincariol initially made soft drinks, cocoa liqueur and cognac and later expanded to beer.

Brazil Kirin, the country's second-largest brewery and beverage company, has 12 factories in 11 states, 20 distribution centers and 190 resellers, serves around 600 thousand points of sales in the country and employs around 11,000 people.

It holds around 9 per cent share of the Brazilian beer market, behind Anheuser-Busch InBev with 67 per cent and 12 per cent held by the Petrópolis Group.

The Sao Paulo-based company produces about 3.0 billion liters of beer a year, and exports its products to the Mercosul, Europe, the US, Asia and Oceania.

In the first half, Brazil's Kirin reported operating losses of ¥7 billion  (R$ 225.2 million), compared to losses of ¥600 million in the same period of 2015, while revenue declined by 21 per cent to 50.7 Billion yen (R$ 1.63 billion). It wrote off R$ 3.88 billion at end 2015

A successful deal will allow Heineken to more than double its production capacity from 20 million hectoliters to 50 million hectoliters in the country, according to JP Morgan.