Acquisition of shares in Myanmar Brewery Limited August 20 th, 2015 Kirin Holdings Company, Limited
Transaction Overview Kirin Holdings Company, Limited ( Kirin ) announces the acquisition of 55% shares in Myanmar Brewery Limited ( MBL ), which holds an approximately 80% market share in Myanmar beer market. Kirin has acquired 55% of total outstanding shares in MBL, a major brewer in Myanmar, from Fraser and Neave Limited ( F&N ). Kirin invested in MBL through Kirin Holdings Singapore Pte, Ltd. ( KHSPL ), the Regional HQ of Southeast Asia and Kirin s wholly owned subsidiary. Kirin has acquired 78,507 shares in MBL, and the total capital required for the acquisition amounted to USD 560 million (approximately JPY 69.7 billion). *1USD = 124.45 JPY as of August 18 th The transaction was completed on August 19 th, 2015. Kirin funded the acquisition through borrowing. 1
Transaction Scheme Before After Thai Beverage Thai Beverage acquired F&N in 2013. Arbitration about a default on the MBL JV contract between F&N and MEHL Thai Beverage The default on the contract was admitted. MEHL appointed KHSPL as the nominee. KHSPL has directly acquired 55% shares from F&N. F&N Suit MEHL* F&N Transferred shares KHSPL Appointed as the nominee MEHL* 55% 45% 55% 45% MBL MBL * Myanmar Economic Holdings Limited 2
Overview of MBL Product mix Company name Headquarters Incorporation 1995 Capital Shareholder and ownership ratio Chairman Myanmar Brewery Limited Yangon, Myanmar 142 million MMK (Myanmar Kyat) Kirin Holdings Singapore Pte Ltd 55% Myanma Economic Holdings Limited 45% Nay Wynn Employees Approx. 1,000 Business Major brands Production locations Net sales EBITDA Net income Beer production and sales in Myanmar Myanmar Beer, Andaman Gold, Myanmar Double Strong Yangon, Myanmar US$ 201 million (MMK 254 billion) US$ 71 million (MMK 90 billion) US$ 51 million (MMK 65 billion) (Source : MBL Financial Results of Sep. 2014) (convert using the exchange rates as of Aug. 18 th,2015) 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Economy Beer: approx. 10% Sales Volume (Unit:MHL) 2009 2010 2011 2012 High-alcohol Beer: 0.4% Standard Beer: approx. 90% (Source : MBL) 2013 2014 (Source : MBL) 3
Strategic Rationale This transaction provides Kirin with its business base in Myanmar, a promising market in the fast-growing Southeast Asia market. Kirin has acquired a majority share in MBL which has the biggest market share in Myanmar that is expected a significant growth because the beer market growth is still at an early stage. Kirin Group s core business base of beer and soft drink in Southeast Asia China Resources Kirin Beverages Co., Ltd. Kirin (China) Investment Co., Ltd. Hangzhou Qiandaohu Brewery Co., Ltd. Taiwan Kirin Co., Ltd. Zhuhai Kirin President Brewery Co., Ltd. Kirin has been steadily strengthening the Group's beer business base in Southeast Asia market through San Miguel Brewery, Inc. in Philippines and the acquisition of MBL in Myanmar. Myanmar Brewery Limited Kirin Holdings Singapore Pte. Ltd San Miguel Brewery Interfood Shareholding Company VIETNAM KIRIN BEVERAGE Co. Ltd. San Miguel 4
Overview of Myanmar Myanmar is an attractive market because its economy has been growing at a GDP rate of 7-8% in recent years, its population is over 51 million, and the demographic pyramid shows huge younger-aged group. The market entry of foreign companies into Myanmar is rapidly increasing due to the progress in deregulations under its democratization. Capital Population Ethnic Naypyidaw 51.4 million Bamar 68%, Shan 9%, Karen 7%, etc. Religion Buddhist 89%, Christian 4%, Muslim 4% Major city (population) GDP(PPP) Real GDP growth rate Unemployment rate Yangon (4.80 million), Mandalay (1.17 million) USD 242 billion USD 4,700 per capita 7.7%(2014) 8.3%(2013) 7.3%(2012) 5.1% Inflation rate 6.6% Currency (Source:CIA 2014) Kyat(MMK) 1 USD=1270 MMK 1 JPY=10.20 MMK (as of Aug., 2014) The demographic pyramid Estimate 2010 thousand people Median age: 26.9 Male Female Country Median age China 35.2 India 25.9 Russia 38.5 Brazil 28.9 Japan 44.6 (Source:Mitsubishi UFJ Research and Consulting) 5
MHL 2.5 Overview of Myanmar Beer Market The beer market size in Myanmar is 2.1 million HL now (Kirin estimate), and CAGR in the last 3 years was 38%. The per capita consumption of beer is no more than 3.7 liters now, and it is very likely that consumption of beer will be increasing due to the economic growth. The total market size of beer 2.0 1.5 1.0 0.5 Sales Volume (MHL) and Market Share 2012 2013 2014 MBL 0.9 79% 1.2 82% 1.7 86% Others 0.2 21% 0.3 18% 0.4 14% Total 1.1 1.5 2.1 (Source:MBL) The per capita consumption of beer (per year) Liters /person year China Japan Thailand Vietnam South Philippines Myanmar Korea 6
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