By Bart Koster
AMSTERDAM—Dutch brewer Heineken /zigman2/quotes/205347870/delayed NL:HEIA +1.21% NV said Wednesday it is in talks to buy two state-owned breweries in Ethiopia for a total of $163 million, in bid to expand its footprint in a fast-growing region.
The Ethiopian government is seeking to privatize the breweries and has entered exclusive talks with Heineken after the brewer made the highest bid in a tender procedure, a company spokesman said.
The breweries have a total capacity of 60 million liters a year and a market share of 20%, the spokesman said. A deal would make Heineken the No. 2 brewer in Ethiopia after BGI Castel, a unit of privately owned French drinks company Groupe Castel.
The Heineken spokesman couldn't say when the deal will be completed.
KBC Securities analyst Wim Hoste said in a note that the acquisition would be a smart move for Heineken as it would expand the brewer's footprint in Africa, where organic volumes are growing at a fast rate and profitability margins are high.
Ethiopia is Africa's second most populous country after Nigeria, where the Dutch brewer is already market leader, Mr. Hoste noted.
"Although it is difficult to judge the bid from a financial perspective given the lack of profitability data of the concerned breweries, it seems a good fit within the African portfolio of Heineken," he said.