India: Heineken and United Breweries strike deal

07 December, 2009

Heineken has signed a new shareholders’ agreement with Dr. Vijay Mallya and Kingfisher brewer United Breweries (UBL) for the brewing and distribution of the Heineken brand in India.

As part of the new agreement, Heineken will acquire APB India and in a subsequent transaction intends to transfer this into UBL during 2010.

Heineken also announced that it has strengthened and enlarged Asia Pacific Breweries (“APB”), its joint venture partnership with Fraser and Neave (“F&N”) through the transfer of Heineken’s controlling interest in PT Multi Bintang Indonesia (“MBI”) and Grande Brasserie de Nouvelle-Calédonie S.A. (“GBNC”). Heineken says this will create a more profitable business and a stronger platform for growth in South East Asia and the Pacific Islands.

Heineken expects that the effect of the transactions will be broadly neutral at net profit level. As a result of the transaction, an exceptional book gain of EUR 145 million before tax will be realised in 2010. Consolidated net debt is expected to be reduced by approximately EUR 175 million.

Jean-François van Boxmeer, chairman of Heineken’s executive board and CEO said: “In the world of beer, there is no bigger or more exciting growth opportunity than India. We have long regarded a strong Indian presence as important in order to increase our exposure to and growth from developing markets. We are therefore extremely proud to announce our partnership with UBL, the strong market leader. Our partnership and the combination of the Kingfisher and Heineken brands will transform our ability to unlock the market's considerable potential and to shape the premium segment. We are now uniquely positioned to benefit from the highly favourable demographics and strong economic fundamentals in the Indian market.

"Alongside this, the integration of our Indonesian and New Caledonian businesses with our joint venture Asia Pacific Breweries, considerably strengthens our platform for growth and our leadership position in South East Asia and the Pacific. Taken together, the agreements announced today represent a powerful, positive development for our future growth and development in Asia."

Dr Vijay Mallya said: “Led by United Breweries and its flagship brand Kingfisher, the Indian beer market has been a strong and exciting growth over the last several years. Given the young demographics of the country, I foresee many decades of strong and profitable growth to come. With its emphasis on quality and the aspirational branding, United Breweries has led this growth from the front, and will continue to do so in future, helped by our new alliance with Heineken. Heineken is among the most respected and recognized names among beers all over the world. The combination should help United Breweries to further its leadership position in the years to come.”

Under the terms of the new agreement, Heineken has the right to nominate three members of the UBL Board, including the executive position of chief financial officer. Following a UBL board meeting in India, Heineken nominee Mr Guido de Boer has been appointed CFO, and Messrs René Hooft Graafland (member of Heineken N.V.’s executive board and chief financial officer) and Siep Hiemstra (regional president, Heineken Asia Pacific) have been appointed as non-executive directors.

Heineken and Dr. Vijay Mallya and his associates jointly hold a majority interest of 75% in UBL, the number one brewer in India with a 48% market share. Heineken holds a 37.5% interest in UBL. Dr. Vijay Mallya and his associates also hold a 37.5% interest in UBL, with the remaining 25% held publicly.

Heineken will continue its export operations in South Korea, Taiwan, and Hong Kong. Heineken’s partnerships in Japan and in Australia with Kirin are unaffected by these announcements.





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