Kirin buys F&N’s stake in top Myanmar brewer for S$786m

SINGAPORE — Japan’s Kirin Holdings has bought Fraser and Neave’s (F&N) 55 per cent stake in Myanmar’s biggest brewer for US$560 million (S$786 million), paving the way for its eventual domination of one of Asia’s most promising beer markets.

Kirin, like many Japanese firms, is looking to expand abroad amid weak sales in a shrinking domestic market.

The Myanmar deal will pair Japan’s second-biggest drinks maker with state-backed Myanmar Brewery, which makes the Myanmar Beer, Myanmar Double Strong, and Andaman Gold brands. Kirin’s announcement confirmed an earlier source-based story by Reuters.

Singapore’s F&N announced the completion of the sale in a separate statement, without naming Kirin.

“Myanmar is an exciting market with considerable prospects,” Kirin said in a statement.

The deal was completed via a Singapore unit of Kirin, who had been appointed by Myanmar Economic Holdings Limited (MEHL) as its nominee for the share transfer from F&N.

It draws a line under a bitter two-year dispute between F&N and MEHL, who earlier this month agreed to complete the sale of F&N’s 55 per cent stake at US$560 million, more than double the price MEHL had initially offered.

Government-backed MEHL won an arbitration case against F&N last year, entitling it to buy the latter’s stake in Myanmar Brewery and take full control of the brewer. But the pair disagreed on the currency exchange rate at which the transaction should be made.

MEHL had sought to compel F&N to sell the stake in Myanmar Brewery for US$246 million, while an independent valuer estimated on July 22 that it was worth US$560 million, Singapore-based F&N said last month.

Myanmar Brewery has an 80 per cent share of the South-east Asian nation’s beer market, forecast by research firm Euromonitor International to nearly double to US$675 million in three years’ time, from an estimated US$375 million this year.

Beer consumption rates in Myanmar are some of the lowest across Asia, at just 3.2 litres per person in 2013, well below the 31 litres per person in neighbouring Thailand, data from Euromonitor shows. “There’s growth potential, but there’s a risk in that it’s already becoming a competitive market,” said Mr Masashi Mori, a Tokyo-based analyst with Credit Suisse.

Myanmar, which has emerged from decades of international isolation, has already attracted global brewers.

Heineken opened a US$60 million brewery joint-venture just outside Yangon last month, months after Carlsberg became the first foreign brewer to set up in Myanmar.

Myanmar Brewery has its production base in Yangon and employs about 1,000 staff, generating earnings before interest and tax of the equivalent of US$70.5 million in 2014. Agencies