Amsterdam, 5 November 2018 - Heineken
N.V. ('HEINEKEN') (EURONEXT: HEIA; OTCQX: HEINY) today
announced that it has signed definitive agreements with China
Resources Enterprise, Limited ('CRE') and China Resources Beer
(Holdings) Co. Ltd. ('CR Beer') to create a long-term strategic
partnership for Mainland China, Hong Kong and Macau (together
'China'). In the context of this partnership, HEINEKEN will become
CRE's 40% minority partner in holding company CRH (Beer) Limited
('CBL'), which controls CR Beer, the undisputed market leader in
the world's largest beer market, China. The terms of the signed
definitive agreements are in line with the non-binding agreements
previously announced in HEINEKEN's media release on 3 August
2018.
Chairmen statementsCommenting on the strategic
partnership, HEINEKEN Chairman of the Executive Board & CEO
Jean-François van Boxmeer said: "I am pleased we
have quickly come to definitive agreements with CRE and
CR Beer to join forces in China. Our long-term strategic
partnership will help HEINEKEN to significantly
expand the availability of the Heineken® brand, and
will strengthen CR Beer's offering in the rapidly growing
premium beer segment in China. We look forward to growing
together by leveraging HEINEKEN's global reach and
marketing capabilities to help accelerate the international
development of CR Beer's
Chinese beer brands worldwide."
Chen Lang, Chairman of CRE, said: "We are looking forward to
join forces with HEINEKEN in China. We believe that our strategic
alliance will maximize synergies, enhance the long-term
competitiveness of both companies and further increase our market
share in China's premium beer market. It will bring together the
competitive advantages of HEINEKEN's international premium brands
with CR Beer's leading position and rich experience in the Chinese
beer market. In HEINEKEN we found the perfect partner to achieve
our ambitions in China and to support our international business
growth. We now look forward to closing the transaction."
Next stepsCompletion of the strategic partnership between
HEINEKEN, CRE and CR Beer and the Company Transactions are subject
to customary and applicable (including regulatory) approvals. If
regulatory approval is successfully obtained, the transaction is
expected to complete in 2019. Further announcements will be made as
and when appropriate.
Strategic rationale and background As part
of the strategic partnership, HEINEKEN China's current operations
will be combined with CR Beer's operations and HEINEKEN will
license the Heineken® brand in China to CR Beer on a long-term
basis.
China's beer market, the world's largest beer market by volume,
is now the second largest premium beer market globally and is
forecast to be the biggest contributor to premium volume growth in
the next five years, driven by its rapidly growing middle class.
Profitability of the Chinese beer market is expected to improve
significantly, driven by premiumisation, demand for international
beer brands and cost optimisation.
The combination of HEINEKEN and CR Beer in China is highly
complementary. CR Beer has a best-in-class route to market (RTM)
network, a wide brewery footprint and a deep understanding of the
Chinese market. HEINEKEN has proven premium brand building
capabilities and a world-class international brand portfolio, led
by the iconic Heineken® brand for which it has built strong equity
over the years in China.
Under the strategic partnership agreement, HEINEKEN will be
CRE's exclusive partner for international premium lager beers in
China. HEINEKEN and CR Beer will investigate which other premium
brands from HEINEKEN's portfolio can be licensed to CR Beer in
China. HEINEKEN and CRE will also investigate if the Dutch
brewer's global presence and marketing capabilities can be
leveraged to support and accelerate the international growth of CR
Beer's Snow® brand and its other Chinese brands to become the
Chinese beers of choice.
Terms of the binding agreementsThe geographical coverage
of the strategic partnership with CRE and CR Beer is China. Under
the binding agreements, HEINEKEN and CRE or CR Beer (as applicable)
will enter into the following transactions simultaneously:
1) HEINEKEN will acquire a shareholding of 40% in CBL and CRE
will own the other 60% in CBL. The Partnership will be governed by
a shareholders agreement. CBL holds a controlling interest of
51.67% in CR Beer, a company listed on the Main Board of The Stock
Exchange of Hong Kong Limited, operating the beer business in
China. Post completion of the transaction, HEINEKEN will have an
effective 20.67% economic interest in CR Beer (see appendix for
shareholder structure overview) and will accordingly expect to get
representation on the board of CBL and of CR Beer. HEINEKEN will
invest a total amount of HK$24.3 billion in CBL, which translates
into an implied purchase price of HK$36.31 per share in CR
Beer.
2) CRE will acquire 5.2 million Heineken N.V. shares (equivalent
to a 0.9% shareholding in Heineken N.V.) which are currently held
in treasury for a total consideration of €464 million or €88.66 per
share.
3) HEINEKEN will contribute its operating entities in China,
including three breweries, into CR Beer for a total consideration
of HK$2.4 billion, through a share sale transaction.
Combined, these transactions will result in a net investment of
€1,948 million (at exchange rates on 3 August 2018) by
HEINEKEN.
4) HEINEKEN and CR Beer will enter into a Trademark License
Agreement (TMLA) for the Heineken® brand in China. HEINEKEN and CR
Beer also signed a Framework Agreement to govern the use of other
premium brands owned by HEINEKEN which may be licensed to CR Beer
in China, as well as to allow CR Beer to leverage HEINEKEN's global
distribution channels to support and accelerate the international
growth of CR Beer's Snow® brand and its other Chinese brands.
Upon completion HEINEKEN's pro-forma net debt/EBITDA (beia)
ratio is expected to slightly exceed the target of 2.5x. HEINEKEN
remains committed to return to the long-term target of below 2.5x.
The transaction will be immediately accretive to margins and
accretive to EPS in the near term.
Press
enquiries
John-Paul SchuirinkE-mail:
pressoffice@heineken.com
Tel:
+31-20-5239-355
Michael FuchsE-mail:
pressoffice@heineken.com
Tel:
+31-20-5239-355
Investor and analyst enquiriesFederico Castillo Martinez
E-mail: investors@heineken.comTel: +31-20-5239-590
Chris MacDonald / Aris Hernández E-mail:
investors@heineken.comTel: +31-20-5239-590
Editorial information
About HEINEKENHEINEKEN is the world's most international
brewer. It is the leading developer and marketer of premium beer
and cider brands. Led by the Heineken® brand, the Group has a
portfolio of more than 300 international, regional, local and
speciality beers and ciders. We are committed to innovation,
long-term brand investment, disciplined sales execution and focused
cost management. Through "Brewing a Better World", sustainability
is embedded in the business and delivers value for all
stakeholders. HEINEKEN has a well-balanced geographic footprint
with leadership positions in both developed and developing markets.
We employ over 80,000 employees and operate breweries, malteries,
cider plants and other production facilities in more than 70
countries. Heineken N.V. and Heineken Holding N.V. shares trade on
the Euronext in Amsterdam. Prices for the ordinary shares may be
accessed on Bloomberg under the symbols HEIA NA and HEIO NA and on
Reuters under HEIN.AS and HEIO.AS. HEINEKEN has two sponsored level
1 American Depositary Receipt (ADR) programmes: Heineken N.V.
(OTCQX: HEINY) and Heineken Holding N.V. (OTCQX: HKHHY). Most
recent information is available on HEINEKEN's website:
www.theHEINEKENcompany.com and follow us on Twitter via
@HEINEKENCorp.
About China Resources Enterprise, LimitedFounded in 1992,
China Resources Enterprise, Limited is the Hong Kong flagship
subsidiary of China Resources (Holdings) Company Limited in the
comprehensive consumer goods and retail services businesses. The
Company focuses on three businesses: beer, food and beverage.
For the beer division, China Resources Beer (Holdings) Company
Limited is listed on the Hong Kong Stock Exchange under the stock
code 291.HK. It is the parent company of China Resources Snow
Breweries Limited, the largest beer manufacturer, seller and
distributor in China. Since 2008, "Snow" has become the world's
best-selling single beer brand by volume.
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