Japan’s Asahi relaunches race for SABMiller’s batch of CEE brewers

By bne IntelliNews October 5, 2016

Japan’s Asahi Group Holdings is preparing to offer more than JPY500bn (€4.3bn) for SABMiller’s Central and Eastern European beer brands, the Nikkei business daily reported on October 5.

The likely sale of the assets has alerted strategic investors around the globe. Among the likely competitors to Asahi are compatriot Kirin and China Resources Beer Holdings. Large international private equity funds are also thought to be interested, as well as local oligarchs, although the action looks a little rich for them.

SABMiller’s brewing businesses, based in the Czech Republic, Poland, Hungary, Romania and Slovakia, are to be spun off to appease anti-trust regulators as part of Anheuser-Busch InBev's $100bn-plus takeover of SABMiller. The transaction is set to take place next week in a deal that will form the world’s largest beer group.

Czech market leader Plzensky Prazdroj – which produces the Pilsner Urquell, Gambrinus, Kozel and Radegast brands - is the top asset to be sold. The package also includes Dreher in Hungary, Poland's Tyskie and Lech, Slovakia's Topvar and Ursus in Romania. Earlier this year, Exane BNP Paribas analysts estimated the brands accounted for about $2.3bn in sales and $450mn in earnings before interest and taxes for SABMiller.

SABMiller is the third-largest brewer in CEE with a market share of roughly 15%, according to Euromonitor. AB InBev’s share is currently 7.9%. In April, Belgium-based AB InBev accepted a $2.9bn offer from Asahi for European premium brands Peroni and Grolsch, as well as British craft-beer Meantime.

The prospect of Asian buyers has left the beer-loving Czechs jittery over whether the integrity of treasured brews such as Pilsner Urquell will be safe in the hands of a Tokyo-based brewer, while, financially speaking, brewing industry analysts are none too sure why such an acquisition would not leave Asahi with a European hangover in the long run. The region’s beer market risks stagnating amid possible population decline that could prove worse than Japan’s own.

US buyout funds KKR and Bain Capital, as well as European funds BC Partners and PAI Partners have been mentioned as possible suitors. CEE specialist Mid Europa Partners is reportedly on the lookout for a bidding partner. Czech family office R2G is another name mentioned.

At the same time, PPF Group, the investment vehicle of Czechia's richest man Petr Kellner, is reported to be interested in Pilsner Urquell, along with Slovak financial group J&T. Polish billionaire Sebastian Kulczyk is another local name mentioned.

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