Japanese brewer Kirin is to leave Myanmar. The company announced it will “withdraw” from Myanmar and sell its majority investment in two leading breweries after a year of fruitless negotiations with the military-owned Myanmar Economic Holdings Public Company Limited (MEHL) to terminate a joint venture partnership.
On February 1, 2021 a coup d’état took place in Myanmar in which the democratically elected forces were ousted and a military government was established. Kirin Holdings, that owns 51% in Myanmar Brewery and Mandalay Brewery with the rest being owned by MEHL, said at that time it would end the joint-venture and “be taking steps as a matter of urgency to put this termination into effect.” (inside.beer, 5.2.2021)
Subsequently Kirin tried to convince its partner MEHL to sell its shares to Kirin or local companies that are not affiliated with the military. However, MEHL, which is involved in a number of deals including financial services and gem trading that serve as a source of funding for the military, turned the tables and surprised Kirin in November by filing a legal filing for its part to end its joint venture with Kirin Holdings.
Since it seems clear now, that even after more than one year there is no satisfying solution for Kirin, the Japanese brewer decided now to sell its shares in the breweries and terminate its whole interests in Myanmar. Still, it is unclear if Kirin will find a buyer who is not related to the military.
“We will resolve this issue by the end of June, no matter what it takes,” Kirin CEO & President Yoshinori Isozaki told Reuters. The withdrawal is not cheap for Kirin as it will result in an impairment loss of JPY 46.6 billion (USD 404 million) in the year ended in December 2021. The cumulative impairment loss for the Myanmar business is even higher and amounts to JPY 68 billion (USD 592 million), according to media reports.