* Kirin operates 12 breweries in Brazil
* Heineken pays $1.1 bln including debt
* Unit had operational losses last year
* Heineken to become Brazil No. 2 brewer
TOKYO/BRUSSELS, Feb 13 (Reuters) - Heineken NV, the world's second-largest brewer, agreed on Monday to buy the loss-making Brazilian breweries of Japan's Kirin Holdings Co Ltd , boosting its presence in the world's No. 3 beer market.
The Dutch brewer will become the second largest beermaker in Brazil, with a share of about 19 percent, behind market leader Anheuser Busch InBev SA. Including debt, Heineken said it would pay 1.025 billion euros ($1.09 billion) for Brasil Kirin.
For Kirin it marks a departure from the Brazilian market, having paid some $3.9 billion in 2011 for 12 breweries, a business which has subsequently lost market share and seen raw materials costs rise due to a weak currency and rampant cost inflation.
Kirin said that Brazil's economic risks and a stagnant and competitive beer and soft drink market meant there were "limitations" to making Brasil Kirin profitable. Kirin said the unit made an operating loss of 284 million reais in 2016.
Brazil's economy is set to enter a third year of recession in 2017, but Heineken said that the nation's beer market was attractive in the longer term, with a premium segment growing faster than the market as a whole.
The acquisition will increase Heineken's presence in the north and northeast of Brazil, allow it to boost sales of the premium lagers Heineken and Sol and yield cost savings.
It already has five breweries in Brazil from its 2010 acquisition of the beer business of Mexico's FEMSA.
"None of the normal ratios work because it's loss-making, but it's a very attractive price," said Trevor Stirling, beverage analyst at Bernstein Research.
Credit Suisse Group AG advised Heineken on the deal.
Some analysts have also said the deal is important as it makes Heineken a stronger rival in a heartland of global beer leader AB InBev just as the latter has pushed into Heineken's markets elsewhere through its takeover of SABMiller.
The acquisition, dependent on approval by Brazil's antitrust agency, is expected to close in the first half of the year.
Shares of AB Inbev's local unit, Ambev SA, gained 0.5 percent to 17.22 reais in São Paulo, a sign the transaction allayed concerns of an imminent price war in the short run.
In the long term, however, "the reading of this news could be negative, because Ambev will have to cope with a stronger competitor," a client note by Banco BTG Pactual's trading desk said.
Separately, Kirin said it would take a 51 percent stake in a beer company in Myanmar. The company, Mandalay Brewery Ltd, will be 49 percent owned by Myanmar Economic Holdings. Kirin and Myanmar Economic Holdings already run already another beer joint venture, Myanmar Brewery Ltd.
Kirin also said it had ended capital alliance talks with Coca-Cola Group, though the two companies would continue to discuss a potential operational partnership.
($1 = 3.1145 reais)
$1 = 0.9386 euros Reporting by Taiga Uranaka and Chang-Ran Kim and Philip Blenkinsop; Additional reporting by Ritsuko Shimizu in Tokyo and Guillermo Parra-Bernal and Bruno Federowski in São Paulo; Editing by Muralikumar Anantharaman, Jason Neely and Frances Kerry