Kirin is selling its entire majority stake in Myanmar Brewery Limited (MBL) and is exiting the country, Kirin Holdings announced today. The sales price of the 51% share is said to be JPY 22.4 billion (USD 164 million). MBL is the biggest brewery in Myanmar and has an 80% share of the market.
Kirin is selling its stake back to its joint-venture partner, the military-owned Myanma Economic Holdings (MEHL).Justice for Myanmar, a human rights group, critizised Kirin Holdings for its “irresponsible exit” that would “continue its complicity in Myanmar military’s atrocity crimes”, as it would ensure “ongoing revenue for the Myanmar military through MEHL.”
Kirin entered the Myanmar market in 2015 by purchasing MBL shares for USD 560 million, thus entering a joint-venturewith 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.
In February 2021, 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)
The negotiations have now come to an end, and apparently the only possible solution to put an end to the affair is a sale to MEHL. The Myanmar government will still have to sign off on the deal.
Keisuke Nishimura, the company's senior executive vice president, said at an online news conference today, he does not “think it will take that long”, however, it will still take "at least two to three months," until Kirin can put a stop to this chapter.
Kirin also announced today, it expects approximately JPY 19 billion (USD 140 million) to be recorded in other operatingincome in the fiscal year ending December 31, 2022 as a gain on reversal of impairment loss recognized in the previous fiscal year. In addition, approximately JPY 18 billion (USD 132 million) in foreign currency translation adjustments on foreign operating activities arising from the Myanmar business has been recorded in shareholders' equity and will be transferred to other operating expenses as a loss on sales of shares in subsidiaries when the share transfer is completed.
The sale of Mandalay Brewery Limited, another joint venture with MEHPCL, has been agreed to in a similar manner and schedule, but the impact on the Kirin Group will be minimal.