Anheuser Busch InBev's (ABI.BR) Brazilian unit AmBev AMBV4.SA agreed to buy a roughly 51 percent stake in the Dominican Republic-based brewer Cerveceria Nacional Dominicana (CND) for over $1.2 billion, forming the biggest beverage company in the Caribbean.
The world's biggest brewer, with brands like Budweiser and Stella Artois, said AmBev is paying about $1 billon for a 41.76 percent stake in the maker of Presidente beer from majority shareholder E. Leon Jimenes, which itself owns 83.5 percent of CND, the largest brewer in the Dominican Republic.
AB InBev said on Monday that AmBev will also pay $237 million for the 9.3 percent stake in CND currently owned by Heineken (HEIN.AS).
AB InBev, with brands including Budweiser and Stella Artois, said the deal will create the leading beverage company in the Caribbean region with businesses in beer, malt and soft drinks. It will have operations in the Dominican Republic, Antigua, St Vincent and Dominica.
AmBev and Leon Jimenes, the Dominican Republic's biggest company, will form a partnership holding the Brazilian brewer's Dominican operation, known as Ambev Dominicana, as well as the majority of CND.
The combined revenue of those businesses was about $570 million in 2011, AB InBev said, estimating that the first 12 months of joint operations would generate operating profit of about $190 million.
The company said those estimates led to an estimated enterprise value of 13 times EBITDA in the deal.
The deal is expected to close in the second quarter of 2012 and to add to earnings in the first year of operations.
Amsterdam-based Heineken, the world's No. 3 brewer after AB InBev and SABMiller (SAB.L), has expanded in the Americas region with its 2010 purchase of Mexican brewer FEMSA Cerveza. AB InBev already has extensive operations in North and South America and controls nearly 50 percent of the beer market in the United States and almost 70 percent of the market in Brazil.
AB InBev shares were up 1.6 percent at 55 euros in Brussels. AmBev shares were down 1.5 percent at 77.65 reals in Sao Paulo.
(Reporting by David Jones in London and Martinne Geller in New York; Additional reporting by Brad Haynes in Sao Paulo, editing by Dave Zimmerman and M.D. Golan)