Heineken ends S American disputes
stake in CCU and selling its Quilmes shares.
Dutch brewing group Heineken has made further moves to strengthen its position in the South American beer market as part of its ongoing programme of pushing into developing beer markets across the world.
The company said it had agreed to acquire the 50 per cent stake held by Germany's Schörghuber group in IRSA, the company that controls the Chilean brewer CCU. At the same time, Heineken has agreed with the Argentinian brewer Quilmes to terminate its licence agreements and sell its 15 per cent stake in the company.
The sale of the 15 per cent stake, which will net the Dutch group some €73 million in 2003, also brings to and end a dispute between Heineken and Quilmes following the latter's acquisition by AmBev, the giant South American brewer. Heineken had attempted to block Quinsa's sales to AmBev on the grounds that such a deal violated its own rights as a shareholder in the Argentinian brewer. That deal, announced in May 2002 but blocked by Heineken, is now expected to be completed soon.
The Chilean transaction will also end a separate dispute, this time between Schörghuber and Quiñenco, relating to the transfer of Schörghuber's indirect stake in IRSA to BrauHolding International, the joint venture of Heineken and Schörghuber in Germany.
Schörghuber indirectly holds a 50 per cent stake in IRSA, while Quiñenco owns the other 50 per cent. In turn, IRSA has a controlling stake of 62 per cent in CCU, the leading Chilean brewer. Heineken has now agreed with Quiñenco that it will take direct control of the 50 per cent stake in IRSA that is currently indirectly held by Schörghuber, thus making Heineken and Quiñenco partners in the IRSA joint venture IRSA. CCU will now become the licensed producer of Heineken beer in both Chile and Argentina.
"This investment in a profitable company, in one of the most attractive countries of the region, will allow Heineken to create a platform for further growth of its business in Chile and Argentina," said Heineken's CEO Thony Ruys.
CCU is the leading beverage company in Chile with three breweries and a total annual beer production of 3.5 million hectolitres, representing a market share of 88 per cent. The production of soft drinks, including mineral water and nectar, amounts to 4.1 million hectolitres, leading to a market share of 24 per cent. CCU also operates wineries with a total production of 850,000 hectolitres of which about half is designated for export.
In Argentina, CCU operates two breweries, and sells 1.5 million hectolitres of beer per annum, giving it a market share of about 12 per cent. The company is best known for its Cristal, Escudo and Dorada brands in Chile and Schneider and Budweiser (under licence) in Argentina.
The transactions in Chile and Argentina will ultimately result in a net cash outlay, taking into account a special dividend of €63 million, of €272 million. The deal will immediately contribute to the net profit of Heineken, the company said.
Meanwhile, Heineken has also continued its expansion in Eastern Europe, acquiring a controlling 68.8 per cent stake in Croatian brewer Karlovacka Pivovara. The deal is related to the CCU investment, since the stake is being acquired from SBE (Southern Breweries Establishment), a joint venture of which CCU owns 50 per cent.
With a domestic market share of 19 per cent and an annual beer volume of around 850,000 hectolitres, Karlovacka Pivovara is the number two brewer in Croatia. The brewery also exports to the region. It employs 670 people and is located in the city of Karlovacka near Zagreb, with Karlovacka as its main brand.
