Heineken toasts $3.1bn partnership deal with Chinese beer giant

Heineken, the world’s second largest brewer, on Friday entered a $3.1bn partnership with China Resources Enterprise, the firm that controls China’s largest brewer, China Resources Beer.

The partnership will see Dutch-based Heineken take a 40% stake in CR Beer for HK$24.35bn ($3.1bn), gaining an established Chinese distribution network and greater access to a premium beer market that has grown by double digits annually since at least 2012, according to Euromonitor data

Heineken entered the Chinese market in 1983 but has struggled to set up a strong distribution network or make a mark with its flagship lager.

CR Enterprise will buy 0.9% of Heineken shares for €464m, or roughly $537.5m.

Chen Lang, chairman of CR Enterprise, said: "We believe we can win together in this new era of the Chinese beer market, in which the premium segment will become increasingly important. In Heineken we have found the perfect partner to achieve our ambitions in China and, as an international partner, to support us in growing our business outside China."

The transaction is expected to reach completion by the end of the year after due diligence and anti-trust approval according to a source with direct knowledge.

Heineken’s premium lagers already sold in China, which include Heineken, Tiger and Sol, should benefit from the deal, while CR Beer is looking to gain a lead over rivals such as Tsingtao.

Linus Yip, chief strategist at First Shanghai Securities, said: "It is a win-win deal for both companies. CR Beer can, through the partnership, gain a great premium beer portfolio in the short run while the deal can accelerate the Chinese brewer to go overseas with its Snow brand in the longer run."

Heineken’s shares were down 2.79% at €89.26 at 1121 BST.