Heineken takes battle to AB InBev in Brazil with $1bn Kirin deal

Heineken, the world’s second-largest brewer, agreed on Monday to buy the loss-making Brazilian breweries of Japan’s Kirin Holdings to boost its presence in the world's third-biggest beer market.

The Dutch brewer will become the number two brewer in Brazil, with a share of some 19 per cent, behind clear market leader Anheuser-Busch InBev. Including debt, Heineken said it would pay €1.025bn (£870m).

For Kirin it marks a departure from the Brazilian market, having paid some $3.9bn (£3.3bn) in 2011 for 12 breweries, a business which has subsequently lost market share and seen raw materials costs rise due to a weak currency.

Kirin said that Brazil’s economic risks and a stagnant and competitive beer and soft drink market meant there were “limitations” to making Brasil Kirin profitable. Kirin said the unit made an operating loss of 284m reais in 2016.

Brazil’s economy appears set to enter a third year of recession in 2017, but Heineken said that its beer market was attractive in the longer term, with a premium segment growing faster than the market as a whole.

The acquisition will increase Heineken's presence in the north and north-east of Brazil, allow it to boost sales of the premium lagers Heineken and Sol and yield cost savings.

It already has five breweries in Brazil from its 2010 acquisition of the beer business of Mexico’s FEMSA.

“None of the normal ratios work because it’s loss-making, but it's a very attractive price,” said Trevor Stirling, beverage analyst at Bernstein Research.

Reuters

Deutsche Bank under scrutiny in Russia over tax practices

Deutsche Bank, which last month settled charges that it helped investors launder money through its business in Moscow, remains under scrutiny in Russia over its tax practices.

“As part of an ongoing routine audit, Deutsche Bank is working with Russian tax authorities on matters relating to standard business operations that follow normal industry practice,” the Frankfurt-based lender said in an emailed statement on Monday.

The bank is suspected of using foreign-exchange swaps to lower the base for calculating income tax in Russia, a person with knowledge of the matter said Monday. The person asked not to be identified because the inquiry hasn’t been concluded.

Deutsche Bank may face claims for as much as 10bn rubles (£136m), said Anatoly Aksakov, head of the Association of Regional Banks of Russia. Aksakov, who also presides over the Russian parliament’s finance committee, said Deutsche Bank contacted him seeking help in the matter and that he has asked the finance ministry to look into it. Deutsche Bank declined to comment on those assertions.

Last month, regulators in the UK and the US fined Deutsche Bank $629m (£503.45m) for failing to properly vet cash transfers abroad from its Russia unit through so-called mirror trades. Separately, the Russian central bank has accused a former Deutsche Bank trader in the country of making illegal trades at the expense of his employer.

Bloomberg

Burger King parent adds stores, boosts profit

Restaurant Brands International reported a better-than-expected profit for the fourth quarter as it expanded the number of Burger King locations around the world and reaped higher sales.

The Oakville, Ontario company has said that it sees potential for expansion for the famous chains outside their home markets, and has struck franchising deals with local operators around the world to do so. For instance, Restaurant Brands says it now has more than 100 Burger King locations in France, compared with none just a few years ago.

In the last three months of 2016, the company opened 495 Burger King locations globally, ending the year with 15,738 stores.

For its Tim Hortons brand, it added 121 stores in the period, bringing the total to 4,613.

RBC Capital Markets analyst David Palmer noted that the company has cited savings initiatives such as cost reductions in the supply chain.

At established locations, the company said Burger King's sales rose 2.8 per cent, including 1.8 per cent in the US and Canada. Restaurant Brands does not disclose how much of that increase was driven by higher spending, versus an increase in the number of customer visits. The latter is seen as a key indicator of health that major chains including McDonald's and Dunkin' Donuts have struggled with amid heightened competition.

AP

Prada 2016 revenue down 10 per cent as Asia, Japan lead global decline

Italian fashion group Prada reported a 10 per cent drop in revenues on Monday as sales fell across all regions, including Japan and its top market Asia Pacific.

Consolidated revenues in the financial year through January 2017 fell to €3.18bn (£3bn), down from €3.55bn a year before. At constant exchange rates sales were down 9 per cent, in line with a Thomson Reuters estimate of €3.2bn.

The Hong Kong-listed group sold 12 per cent less at constant exchange rates in its biggest market, the Asia Pacific. Sales fell 13 per cent at constant exchange rates in Japan, after five years of consecutive growth, it said in a statement.

“This past year we implemented a profound phase of business process rationalization, still underway, and identified important strategies to secure the Group's future growth,” said chief executive Patrizio Bertelli in the statement.

Reuters

Samsung chief appears for second round of questions in graft probe

Samsung Group leader Jay Y. Lee appeared at the South Korean special prosecutor's office for questioning on Monday as part of a wider investigation into an influence-peddling scandal that could topple President Park Geun-hye.

The special prosecutor has focused on South Korea's biggest conglomerate, accusing Lee in his capacity as Samsung chief of pledging 43bn won ($37.31m) to a business and organizations backed by Park's friend, Choi Soon-sil, in exchange for support for a 2015 merger of two Samsung companies.

The funding included sponsorship for the equestrian career of Choi's daughter, who is under arrest in Denmark after being sought by South Korean authorities.

Park, Lee, Choi, and Samsung Group have all denied bribery accusations.

Proving illicit dealings between Park or her confidantes and Samsung Group is critical for the special prosecutor's case that ultimately targets Park, analysts have said.

Park was impeached by parliament in December and South Korea's Constitutional Court will decide whether to uphold that decision. She has been stripped of her powers in the meantime.

Reuters

BHP vows legal action at top copper mine after group enters site

BHP Billiton, the owner of the world’s biggest copper mine known as Escondida, said it will take legal action after a group of more than 300 people entered the mine site during a strike and forced some contractors to abandon the compound.

People wearing masks entered the mine site at 6pm Santiago time on Saturday, threatening the staff of contract companies and setting off fire alarms, causing damage, the Melbourne-based company said in an e-mailed statement Sunday. A smaller group cut power to security cameras, it said.

The union, whose 2,500 members stopped work on Thursday after wage talks broke down, has set up a makeshift camp just outside the mine. Union President Patricio Tapia said while a group of members did enter the mine site, they marched peacefully around the contractor workers’ camp and left. They didn’t trigger alarms or break anything, Tapia said by phone Sunday.

The incident is the latest in a tense first four days of a strike that helped propel the price of copper to its biggest gain in almost four years on Friday, after Escondida declared force majeure on its shipments and a fire broke out in another dormitory area for contractors. The union denied any involvement.

Bloomberg

M&S said to offer top clothing job to former next star Angelides

Marks & Spencer has offered the key role at the helm of its struggling clothing business to former Next Plc product director Christos Angelides, according to a person with knowledge of the matter.

Angelides, who most recently led the Abercrombie & Fitch brand, is M&S’s preferred candidate for the job, said the person, who declined to be identified as the matter is private.

Angelides and a Marks & Spencer spokeswoman both declined to comment.

When Steve Rowe was promoted from M&S’s head of clothing to become its chief executive officer in April he made it clear that arresting a five-year sales slump at the London-based retailer’s clothing division was his top priority. One of his first decisions was that he would personally remain in charge of the clothing business for the foreseeable future.

In his capacity as Next’s group product director, Angelides was a thorn in the side of M&S for 16 years. He played a crucial role in luring customers away from the UK’s largest clothing retailer, which saw its market share dwindle.

Bloomberg

RBS shares rise after bank moves to slash costs

Shares in the Royal Bank of Scotland raced ahead on Monday as investors cheered reports that the bank was on the cusp of making £800m worth of cuts.

RBS was up more than 1 per cent, or 2.6p to 231.5p, after The Sunday Times said the embattled lender would move to slash 15,000 jobs as it braces for its ninth consecutive year of losses.

The FTSE 100 was marginally ahead, up 3.11 points to 7,261.68, with Lloyds Banking Group edging down 0.3p to 65.4p and Barclays climbing 1.2p to 229.8p.

Neil Wilson, senior market analyst, said RBS had already trimmed costs at a rate of around £1bn a year for the past three years.