Kirin Holdings completed on Monday its transfer of all shares in Myanmar Brewery Limited (MBL) to its joint venture partner, the military-owned Myanma Economic Holdings Public Company Limited (MEHL). The shares were held before by Kirin Holdings Singapore Pte (KHSPL) a subsidiary of Kirin Holdings.
MBL is the biggest brewery in Myanmar and has an 80% share of the market.
Kirin entered the Myanmar market in 2015 by purchasing MBL shares for USD 560 million, thus entering a joint-venture with military-owned MEHL. After a coup d’état in Myanmar on February 1, 2021 in which the democratically elected forces were ousted and a military government was established, Kirin came under pressure for financially supporting the military regime which is said to be responsible for countless atrocities against the Rohingya and other ethnic minorities.
Shortly after the coup d’état, Kirin’s President and CEO Yoshinori Isozaki said he was “deeply concerned by the recent actions of the military in Myanmar, which are against our standards and Human Rights Policy.” And he added that “given the current circumstances, we have no option but to terminate our current joint-venture partnership with Myanma Economic Holdings Public Company Limited.” (inside.beer, 5.2.2021) However, it took more than a year and lengthy negotiations, in which Kirin tried to sell out its joint-venture partner or to find a different buyer for its stake, to come to the conclusion to “withdraw from the country” (inside.beer, 11.3.2022)
Finally in June 2022, Kirin announced to sell its entire majority stake in MBL to MEHL and to exit the country. (inside.beer, 30.6.2022)
According to this week’s press statement, KHSPL on behalf of Kirin Holdings has now decided to transfer all of its MBL shares directly to MBL (MBL share buyback) as “the most suitable means to terminate the joint venture as soon as possible”. The transfer price is expected to be approximately JPY 20.5 billion (USD 156 million) which is slightly less than announced half a year ago.
Upon completion of the share transfer, the translation difference of approximately JPY 19 billion (USD 145m) from foreign operating activities arising from the Myanmar business, which is recorded in shareholders' equity, will be transferred to other operating expenses as a loss on sales of subsidiary stock. This amount is a current estimate and is subject to change.
Upon the share transfer, MBL and MEHPCL have agreed to take the following measures to ensure the best possible treatment of local employees.
(1) Ensure freedom of choice in regards to employment
(2) Prohibition of disadvantageous changes in salary and other treatment for one year
(3) Provision equivalent to three months' salary for MBL employees (already disbursed prior to the share transfer)
A stock transfer for Mandalay Brewery Limited, another joint venture with MEHL, has been agreed to in a similar manner and schedule, but the impact on the Kirin Group will be minimal, the Japanes Group reported.