Heineken is in negotiations with Japanese group Kirin to buy its Brazilian beer business.
The Dutch brewer confirmed it was in talks about “a potential transaction in respect of Brasil Kirin”.
Japanese business paper Nikkei reported Heineken could pay $870m (£705m) for the Brazilian brewer, a big discount from the $4bn it was valued at in 2011.
It comes as Heineken closes in on a separate deal for UK pub operator Punch Taverns.
Heineken agreed last month to acquire about 2,000 Punch Taverns pubs in a £400m deal.
The global beer industry has been shaken up by the £79bn merger of the world’s two biggest brewers, AB InBev and SAB Miller.
Brazil is the third largest beer market in the world, but has been hit by the country going into recession.
In September, Kirin was reported to be to be talking to a number of companies about possible partnerships for its struggling Brazilian beer business.
Kirin, which also owns Japanese beer Kirin Ichiban, said on Friday it was “reviewing all options”.
Brasil Kirin, whose flagship beer is Schin, was the country’s second largest brewer when Kirin acquired it in 2011, but it has since turned loss-making and has lost market share rapidly.