AB InBev Offers to Sell SABMiller's Central, Eastern Europe Brands -- 3rd Update
April 29 2016 - 6:59AM
Dow Jones News
By Saabira Chaudhuri
LONDON-- Anheuser-Busch InBev NV has offered to sell SABMiller
PLC's Central and Eastern European brands, including Pilsner
Urquell, ahead of a decision by the European Commission on whether
to approve its acquisition of the London-based brewer.
The assets could fetch around $5 billion, according to Exane BNP
Paribas analysts, who estimate they made up about $2.3 billion in
sales and $450 million in earnings before interest and taxes for
SABMiller.
AB InBev is offering up all of SABMiller's assets in Hungary,
Romania, Czech Republic, Slovakia and Poland, which includes the
rights to Pilsner Urquell outside the U.S. Within the U.S. AB InBev
has already agreed to sell Pilsner Urquell to Molson Coors Brewing
Co. as part of a larger deal divesting its stake in the American
brewer's joint venture with SABMiller.
The potential sale announced Friday would also include brands
such as Polish beers Tyskie and Lech, Hungarian beer Dreher, and
Romanian beer brand Ursus. Eastern Europe historically hasn't been
a major focus for AB InBev, whose brands there currently are
distributed by Molson Coors, and the deal is aimed at mitigating
concerns the European Commission could have about the pending
merger.
SABMiller is currently the third-largest brewer in Eastern
Europe, with a market share of roughly 15%, according to
Euromonitor, while AB InBev trails behind with a share of 7.9%.
Carlsberg A/S and Heineken NV, the Nos. 1 and 2 brewers in
Eastern Europe by market share, are unlikely to buy many of the
assets due to regulatory hurdles, said analysts. Molson Coors also
is seen as unlikely to be a buyer. Analysts instead pointed to
Asahi Group Holdings Ltd. and private-equity firms as likely
buyers.
At AB InBev's shareholder meeting this week, Chief Executive
Carlos Brito said management was currently focused on two things:
interacting with regulators and integration planning.
"Since day one, we said we'd be very proactive and up front with
regulators to avoid any overlaps," he said. "Of course, the final
word is from the regulators."
In addition to agreeing to sell SABMiller's share of its joint
venture in the U.S., AB InBev has taken a series of other steps to
ensure its acquisition of SABMiller is waved through.
Earlier this month, the Belgian-based brewer accepted an offer
from Asahi for its European premium brands Peroni and Grolsch, as
well as British craft-beer brand Meantime.
AB InBev also recently reached an agreement with the South
African government to create a $69 million investment fund and
other commitments designed to help it secure regulatory approval
for the deal there. South Africa's Competition Commission recently
asked for an extension of its review because it had concerns about
the merger.
The European Commission, which is studying AB InBev's pending
deal to buy SABMiller, will make a decision on May 24. It could
either wave the acquisition forward or lay out objections, pushing
the deal into a so-called phase-two review, which can often be a
long and difficult process. AB InBev has been aiming to clear the
deal in the first phase of the commission's review.
The AB InBev-SABMiller merger would create the world's biggest
beer group with about 30% of the global beer market.
Natalia Drozdiak and Razak Musah Baba
contributed to this article.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
April 29, 2016 06:44 ET (10:44 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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