Notes 6-10
6. Acquisitions and disposals of subsidiaries, joint ventures and minority interests
Krušovice and Syabar acquisition
On 4 September 2007 Heineken acquired Králowský Pivovar Krušovice a.s. in the Czech Republic from Radeberger Gruppe KG. The transaction was funded from existing cash resources.
On 28 December 2007, Heineken acquired the Cypriot holding company of the CJSC Brewing Company ‘Syabar’, in Bobruysk, Belarus. Heineken acquired Syabar’s Cypriot holding company from a consortium led by Detroit Investments Limited (Cyprus) and from the International Finance Corporation, an affiliate of the World Bank. The transaction was funded from existing cash resources.
Due to the competitive sensitivity and the non-disclosure agreements with the parties involved, the acquisition prices of the Krušovice and Syabar acquisition are not individually disclosed.
Effect of Krušovice and Syabar acquisition
The Krušovice and Syabar acquisition had the following effect on Heineken’s assets and liabilities on acquisition date.
| Pre- | ||||
|---|---|---|---|---|
| acquisition | Recognised | |||
| carrying | Fair value | values on | ||
| In millions of EUR | Note | amounts | adjustments | acquisition |
| Property, plant & equipment | 14 | 70 | 50 | 120 |
| Intangible assets | 15 | – | 17 | 17 |
| Other investments | 8 | – | 8 | |
| Inventories | 7 | – | 7 | |
| Trade and other receivables, prepayments and accrued income |
10 | – | 10 | |
| Cash and cash equivalents | 2 | – | 2 | |
| Minority interests | – | (2) | (2) | |
| Loans and borrowings | (9) | – | (9) | |
| Provisions | 28 | (1) | – | (1) |
| Deferred tax liabilities | 18 | (1) | (13) | (14) |
| Current liabilities | (32) | – | (32) | |
| Net identifiable assets and liabilities | 54 | 52 | 106 | |
| Goodwill on acquisition | 15 | 134 | ||
| Consideration paid, satisfied in cash | 240 | |||
| Cash acquired | (2) | |||
| Net cash outflow | 238 |
The fair values of assets and liabilities have been determined on a provisional basis, as not all information was available on the balance sheet date.
The amount of goodwill paid relates to synergies Heineken expects to realise. With respect to the Krušovice acquisition, the synergies to be achieved are a result of a stronger presence in the Czech market a growth expected that the potential growth opportunities will be realised with the appropriate commercial investments. Furthermore, it is expected that cost synergies will be realised due to more efficient purchasing, sourcing and selling, as a result of the integration of these activities within the region Central and Eastern Europe.
With respect to the Syabar acquisition, the synergies to be achieved are a result of a stronger presence in the Belarus market, also it is expected that the Belarus market will become a fast-growing market and by way of this acquisition a platform is established from which it is expected that both the Heineken brand and imported Russian brands will grow. Furthermore, it is expected that cost synergies will be realised resulting from more efficient purchasing, sourcing and selling due to the integration of these activities within the region Central and Eastern Europe.
The contribution of these acquisitions in 2007 to results from operating activities was €1 million and to revenue €12 million.
If both acquisitions had occurred on 1 January 2007, management estimates that consolidated results from operating activities would have been €6 million higher and consolidated revenue would have been €49 million higher. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of the acquisitions would have been the same if the acquisitions had occurred on 1 January 2007.
Other acquisitions and disposals
In addition to the acquisitions of Krušovice and Syabar, there were various other minor acquisitions and disposals during 2007.
In 2007 wholesalers in France, Spain and the Netherlands were acquired. In Vietnam and Germany breweries were acquired.
Disposals during the year concerned a number of wholesalers in Italy and Austria. Furthermore our joint venture in Chile sold the majority of shares of a subsidiary, which held investments in brands.
Effect of other acquisitions and disposals
Other acquisitions and disposals had the following effect on Heineken’s assets and liabilities on acquisition date.
| In millions of EUR | Note | Total other acquisitions 2007 |
Total disposals 2007 |
|---|---|---|---|
| Property, plant & equipment | 14 | 6 | (11) |
| Intangible assets | 15 | – | (11) |
| Investments in associates | 7 | – | |
| Other investments | 9 | (2) | |
| Deferred tax assets | 18 | – | (3) |
| Inventories | 2 | (2) | |
| Trade and other receivables, prepayments and accrued income |
1 | (12) | |
| Cash and cash equivalents | 2 | (1) | |
| Minority interests | – | (6) | |
| Loans and borrowings | – | 2 | |
| Employee benefits | 26 | – | 1 |
| Current liabilities | (35) | 36 | |
| Net identifiable assets and liabilities | (8) | (9) | |
| Goodwill on acquisitions | 15 | 17 | (4) |
| Consideration paid/(received), satisfied in cash | 9 | (13) | |
| Cash disposed of/(acquired) | (2) | 1 | |
| Net cash outflow/(inflow) | 7 | (12) |
The fair values of assets and liabilities of some acquisitions have been determined on a provisional basis, as not all information was available yet on the balance sheet date.
The contribution in 2007 of the other acquisitions to results from operating activities and to revenue was immaterial. If the acquisitions had occurred on 1 January 2007, management estimates that consolidated results from operating activities and consolidated revenue would not have been materially different.
Acquisition of minority interests
In 2007, Heineken increased its ownership in Heineken Spain. The Group recognised an increase in goodwill of €6 million.