Anheuser-Busch InBev plans to sell SABMiller’s Pilsner Urquell and other beer brands in central and eastern Europe, worth a potential $6 billion, as it steps up efforts to win regulatory approval for its $107.5 billion acquisition of the London-based brewer.
AB InBev submitted an updated proposal to the European Commission that included a commitment to sell operations in Hungary, Romania, Czech Republic, Slovakia and Poland, the company said in a statement Friday. It already has agreed to sell the Peroni, Grolsch and Meantime brands to Japan’s Asahi Group Holdings Ltd.
“Conservatively, I think you can get $6 billion for this; I don’t think that’s an overly ambitious number,” Javier Gonzalez Lastra, an analyst at Berenberg, said by phone. It’s possible that AB InBev could get even more for the business, perhaps 15 times the operating profit of about $460 million, he added. That would amount to $6.9 billion.
While the sale may help with regulatory approval, it also will allow AB InBev to cut back in a difficult market. SABMiller’s lager volume in Eastern Europe has been weighed down by discounting and competition in Poland, where it’s the largest brewer with a 35 percent market share, according to Eddy Hargreaves, an analyst at Canaccord Genuity.
“SABMiller’s eastern Europe operations were certainly not key to the deal in AB InBev’s perspective, I think they would willingly concede this,” Hargreaves said by phone.
AB InBev is doing all it can to secure regulatory approval around the globe for the takeover, the industry’s largest ever. This month, it agreed to create a $69 million fund to support the South African beer sector and protect jobs in the country where SAB was founded. It’s also selling stakes in joint ventures SAB held in the U.S. and China.
Completion Goal
AB InBev sank 2.7 percent to 109.55 euros as of 11 a.m. in Brussels. SABMiller climbed 0.3 percent to 4,216 pence in London.
SABMiller had a 1 percent decline in lager volumes in Europe in its most recent fiscal year, hurt by Poland. Performance in the Czech Republic and Slovakia improved throughout the year, fueled by sales of premium-priced Pilsner Urquell, the company said.
Japanese brewer Asahi would have an interest in the brands as it would complement their new-found presence in Europe, Berenberg’s Lastra said. Molson Coors may also be interested in expanding its market share in the region after acquiring StarBev for $3.5 billion in 2012. The acquisition included Staropramen, the second-largest brewer in the Czech Republic.
“I guess they would go knocking on Asahi’s door again given they sold Peroni and Grolsch to them, to see if they’re interested in these assets,” Andrew Holland, analyst at Societe Generale, said by phone. “Heineken is the least obvious suitor as it would run into antitrust problems in almost every country.”
AB InBev expects European regulators to publish the findings of the first phase of their inquiry into the transaction by May 24. It reiterated that it hopes to seal the deal during the second half of the year.
The businesses to be offered for sale are Dreher Breweries in Hungary; Kompania Piwowarska in Poland; Plzenský Prazdroj, the brewer of Pilsner Urquell, in the Czech Republic; Pivovary Topvar in Slovakia; and Ursus Breweries of Romania, SABMiller said in a separate statement.
“These assets include a number of top brands in their markets and are expected to attract considerable interest from potential buyers,” AB InBev said.
