The purchase of a large stake in San Miguel Brewery will allow Kirin to expand its manufacturing capabilities in Asia and benefit from large sales in the Philippines thanks to the established market position of the target company. This deal should advance Kirin's aim to become a market leader in Asia Pacific over the coming years.
By signing a $1.19 billion acquisition agreement with San Miguel Brewery (SMB), Kirin Holdings is pursuing an expansion of manufacturing capabilities in Asia and aiming to tap into the opportunities in the Philippines' growing beer market.
Japan's second-largest brewer, Kirin has had a strategic equity partnership with San Miguel Corporation since 2002 and owns about 20% of the company. In order to finalize the stake acquisition in SMB, Kirin announced that it will sell its entire 19.9% share of San Miguel Corporation to Q-Tech Alliance Holdings for $800m. Once the acquisition deal is settled, Kirin will hold 43.25% of SMB, while San Miguel Corporation will retain a majority 51% stake.
SMB produces and markets San Miguel Pale Pilsen, Red Horse, San Mig Light and five other affiliated brands. The company employs 2,823 employees and has five manufacturing facilities in the Philippines. By acquiring a significant stake in SMB, Kirin aims to exploit a large manufacturing base in the Philippines and expand its production capacity.
Datamonitor estimates that the beer market in the Philippines was worth $3,231.6m in 2007 and expects it to grow by a CAGR of 2.3% between then and 2012, reaching $3,615.3m in the latter year. San Miguel's market share in the Philippines is about 95%, and the group has long been established in several Asian markets, including China, Indonesia, Vietnam and Thailand. Through the acquisition, Kirin looks to expand its sales operations in the Philippines in view of the significant share of the market held by SMB.
Kirin targets a further development of synergies with San Miguel within the alcohol segment: it is considering the takeover of San Miguel's international beer operations. Kirin's long-term business vision is to become a market leader in Asia Pacific, and the company is striving to implement a strategy of profitable operations in the short term.