Business Day

Chi­nese brewer eyes SABMiller’s Eu­ro­pean as­sets

- RUTH DAVID and VINICY CHAN Lon­don/Hong Kong Business · Alcoholic Drinks · Investing · Beijing · Anheuser-Busch · InBev · Switzerland · Poland · Kohlberg Kravis Roberts · Hungary · Romania · Czech Republic · Slovakia · European Union · China · Beer · SABMiller · Snow beer · Anheuser-Busch InBev · InBev Belgium · China Resources · Asahi Group Holdings · Kulczyk Investments · CVC Capital Partners · KKR Financial · Advent International · China Resources Beer · Peroni Nastro Azzurro · Koninklijke Grolsch N.V.

CHINA Re­sources Beer Hold­ings, maker of the world’s most con­sumed beer, is con­sid­er­ing a bid for SABMiller’s cen­tral and East­ern Eu­ro­pean as­sets, val­ued at about $6bn, ac­cord­ing to peo­ple fa­mil­iar with the mat­ter.

The pro­ducer of China’s Snow beer brand is speak­ing with po­ten­tial ad­vis­ers about a bid, the peo­ple said, ask­ing not to be iden­ti­fied as the de­tails are not pub­lic. A sale process for the as­sets, which in­clude the brewer of Czech lager Pil­sner Urquell, is ex­pected to start in Oc­to­ber af­ter SABMiller’s deal with An­heuser-Busch InBev (AB InBev) closes, they said.

China Re­sources could go up against Ja­panese brewer Asahi Group Hold­ings and fi­nan­cial bid­ders, in­clud­ing Swiss in­vest­ment group Ja­cobs Hold­ing, Poland’s Kul­czyk In­vest­ments and CVC Cap­i­tal Part­ners, three of the peo­ple said. KKR & Co, Ad­vent In­ter­na­tional Cor­po­ra­tion and Mid Europa Part­ners may also bid, they said.

“The com­pe­ti­tion will be huge,” Bloomberg In­tel­li­gence an­a­lyst Dun­can Fox said. “At some point, CR Beer will want to move out­side of China. How­ever, many names seem to be in­ter­ested in these as­sets.”

AB InBev agreed to di­vest op­er­a­tions in Hun­gary, Ro­ma­nia, the Czech Repub­lic, Slo­vakia and Poland to help se­cure reg­u­la­tory ap­proval for its about $100bn takeover of ri­val SABMiller. The com­pany may pre­fer to sell to another brewer to help en­sure a level play­ing field among com­peti­tors in these mar­kets, the peo­ple said.

China Re­sources Beer chief fi­nan­cial of­fi­cer To­makin Lai said in Au­gust the com­pany was open to ac­qui­si­tion op­por­tu­ni­ties and was not in­ter­ested in smaller com­pa­nies. Rep­re­sen­ta­tives for AB InBev, Asahi, China Re­sources, CVC, Ad­vent and Kul­czyk de­clined to com­ment. Rep­re­sen­ta­tives for Mid Europa Part­ners, KKR and Ja­cobs Hold­ing did not im­me­di­ately re­spond to re­quests for com­ment.

AB InBev al­ready agreed to sell the Peroni, Grolsch and Mean­time brands to Asahi for €2.55bn. Divest­ing ad­di­tional as­sets in cen­tral and east­ern Europe will help AB InBev cut back in a dif­fi­cult mar­ket. SABMiller’s Pol­ish busi­ness, the largest brewer in the coun­try, has been weighed down by dis­count­ing and com­pe­ti­tion that con­trib­uted to de­clin­ing lager sales in Europe over­all.

In March, China Re­sources agreed to buy out SABMiller’s re­main­ing stake in the Snow beer ven­ture for $1.6bn in a deal that helped AB InBev se­cure Chi­nese an­titrust ap­proval.

SABMiller’s board rec­om­mended AB InBev’s takeover of­fer, which will com­bine the world’s two largest brew­ers, in July. Share­hold­ers will vote on the deal on Septem­ber 28, and the trans­ac­tion is ex­pected to close on Oc­to­ber 10.

China Re­sources Beer re­ported first-half profit from con­tin­u­ing op­er­a­tions rose 45% to 605-mil­lion yuan ($91m) due to higher av­er­age sell­ing prices, en­hanced pro­duc­tion ca­pac­ity and re­duced ma­te­ri­als costs. The brewer’s sales for the six months ended June 30 de­clined 1.8% to 15.2-bil­lion yuan.

The com­pe­ti­tion will be huge. Many names seem to be in­ter­ested in these as­sets

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