HEINY - Why Heineken may make a strategic acquisition in the U.S.

2023-03-27 07:36:17 ET

Evercore ISI dove into Dutch brewing company Heineken ( OTCQX:HEINY ) on Monday following reports the beer giant is looking to make an acquisition in the U.S.

Analyst Robert Ottenstein and team believe that Heineken ( OTCQX:HEINY ) will eventually greatly expand its presence in the U.S. through  acquisition and become a leading player in the U.S. beer or alcohol market. In terms of timing, the Evercore analysts noted that M&A is opportunistic and partners limited in number. Thus,  Heineken is said to have no burning need to do something in the near future and is expected to be patient before pulling off a deal.

The rationale for Heineken ( OTCQX:HEINY ) to make a move in the U.S. is tied to the region being the start for many consumer trends and innovations. It was also noted that geographic diversification is a way to protect long-term cash flows. In addition, the relative stability of the U.S. and the dollar are thought to be attractive to the Heineken ( OTCQX:HEINY ) family.

Ottenstein said it could be strategic mistake to think of the U.S. business as just a beer business. "Lines are blurring, RTD drinks are changing the industry, and the landscape may look very different in 5-10 years," he wrote.

Shares of Heineken ( OTCQX:HEINY ) are up 11.69% on a year-to-date basis with the beverage sector as a whole outperforming the broad market. Heineken has outperformed Anheuser-Busch InBev ( BUD ), which is up 4.33%.

Last week, Boston Beer Company ( SAM ) rallied after Bernstein suggested that Heineken ( OTCQX:HEINY ) could be a possible acquirer.

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