Davis Polk is advising Heineken N.V. in connection with its entry into definitive agreements with China Resources Enterprise (“CRE”) and China Resources Beer (Holdings) Co. Ltd. (“CR Beer”) to create a long-term strategic partnership in Mainland China, Hong Kong and Macau. As part of this strategic partnership, Heineken will become CRE’s 40% partner in holding company CRH (Beer) Limited (“CBL”), which controls CR Beer, a market leader in the world’s largest beer market, China.

Under the strategic partnership, Heineken will invest HK$24.3 billion in CBL for its 40% stake. CRE will also acquire a 0.9% shareholding in Heineken for €464 million. Heineken will further contribute its operating entities in China, including three breweries, into CR Beer for a total consideration of HK$2.4 billion. Combined, these transactions will result in a net investment of €1.948 billion (at exchange rates on August 3, 2018) by Heineken.

In addition, Heineken will license the Heineken brand in China to CR Beer. It is intended that Heineken will be CR Beer’s exclusive partner for international premium lager beers in China. Heineken and CR Beer have also signed a Framework Agreement to govern the use of other premium brands owned by Heineken which may be licensed to CR Beer in China.

Heineken N.V. is one of the world’s largest brewing companies, with over 165 breweries in more than 70 countries worldwide. The Heineken Group has a portfolio of more than 300 international, regional, local and specialty beers and ciders.

CRE is one of China’s largest comprehensive consumer goods and retail services companies, and the indirect parent of CR Beer. CR Beer is listed on the Hong Kong Stock Exchange, and is the parent company of China Resources Snow Breweries Limited, the largest beer manufacturer, seller and distributor in China. The flagship brand “雪花 Snow” is the largest beer brand by volume worldwide.

The Davis Polk corporate team includes partners Miranda So and Paul Chow and counsel-registered foreign lawyer Brian J. Snyder. The intellectual property and technology team includes partner Pritesh P. Shah and associate Samantha Lefland. Counsel Stephenie Fung is providing Hong Kong law advice. Partner Patrick S. Sinclair and registered foreign lawyer Jing Kang are providing compliance advice. Counsel Alon Gurfinkel and associate Omer Harel are providing tax advice. Members of the Davis Polk team are based in the Hong Kong, New York and London offices.

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