Japan's Kirin Holdings Co is buying a controlling stake in major Brazilian beer and soft drinks maker Schincariol for 198.8 billion yen ($2.6 billion) to expand its market share in the fast-growing South American economy.
Kirin said on Tuesday it had bought all outstanding shares of Aleadri-Schinni Participacoes e Representacoes S.A., which holds a 50.45% stake in Schincariol, Brazil's No.2 beer and No.3 soft drinks maker.
The purchase of the maker of Nova Schin and Devassa beer brands was funded via cash on hand and loans and will give Kirin access to Schincariol's nationwide distribution network and 13 production facilities.
Kirin's deal is among the biggest overseas takeover by a Japanese company so far this year, after the $13.7 billion purchase of Nycomed International by Takeda Pharmaceutical in May and near Terumo Corp.'s $2.63 billion deal to buy CaridianBCT Inc. in March, according to Thomson Reuters data.
Japanese companies have taken advantage of a strong yen to look for growth opportunities abroad to counter sluggish economic activity in the country.
The move is also part of Kirin's strategy, pursued over the past several years, to diversify its operations and grow outside its saturated home market, where it vies for the top spot in beer sales with Asahi Breweries .
Citigroup is the financial adviser for Kirin and BTG Pactual is advising Schincariol.
Japan's beer market shrank more than 15% in terms of shipment volumes during the last decade as the population aged, consumer spending sagged and drinkers opted for cheaper alcoholic beverages, forcing companies to look overseas for profit growth drivers.
Brazil is the world's third-largest beer market after China and the United States, with beer consumption rising the past years buoyed by an economic boom and rising wages. The market is dominated by the world's largest brewer Anheuser-Busch InBev with a market share of near 70%.
In January, Kirin announced a deal to establish a joint venture with China's top beer maker China Resources Enterprise to produce and distribute non-alcoholic beverages in China.
By 0200 GMT, Kirin's shares were down 0.4%, while the benchmark Nikkei share average lost 1.3%.