Valuation: Measuring and Managing the Value of Companies, Fifth Edition

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Case Study: Heineken

This chapter applies the tools and techniques from Part Two and the previous chapters in Part Five by presenting a case study that develops an external perspective on the performance and valuation of Heineken as of January 2009.⁴⁴⁶ The case study parallels the kind of outside-in analysis and valuation that a sophisticated investor might undertake, but the steps are the same as for making an internal, company-wide analysis and valuation to support executive decisions.

Based in the Netherlands, the Heineken Group is the world’s third largest beer company, behind Anheuser-Busch InBev (AB InBev) and SABMiller. Its main brands are the popular Heineken and Amstel beers. The company is an international brewer; only 4 percent of its volume comes from the Netherlands. Heineken earns 49 percent of net revenues in Western Europe, 26 percent in Central and Eastern Europe, 12 percent in Africa and the Middle East, 11 percent in North America, and the remaining 2 percent in the Asia-Pacific region. In 2007, Heineken joined Danish brewer Carlsberg to acquire British competitor Scottish & Newcastle (S&N). The €13.5 billion acquisition, in which it took over 45 percent of S&N, was a major move for Heineken in the global consolidation of the beer industry. After this acquisition, Heineken generated revenues of €14.3 billion and employed more than 56,000 people worldwide in 2008.⁴⁴⁷

We start with a short industry description, after which we rearrange Heineken’s financial ...