AB InBev set to sell SABMiller European assets to clinch deal

ANHEUSER-BUSCH InBev, the world’s largest brewer, intends to sell the Eastern European brewing assets of SABMiller to secure regulatory approval for its $100-billion-plus (about R1.4trillion) takeover of its rival.

AB InBev has already lined up Japan’s Asahi Group to buy SABMiller’s Grolsch, Peroni and Meantime brands for à2.55billion (about R41-billion) and said on Friday it had put SABMiller’s activities in the Czech Republic, Hungary, Poland, Romania and Slovakia up for sale.

It has notified the European Commission, the European Union’s antitrust regulator, which is set to deliver its verdict by May 24.

A number of analysts expressed surprise at the news, given that AB InBev has barely any business in Eastern Europe outside Ukraine and Russia.

“It seems slightly strange,” said Andrew Holland, a beverage analyst at Societe Generale. “There is no antitrust overlap that I can see. AB InBev has no presence to speak of in these countries. Perhaps the EU is looking at the pan-European market share.”

If the commission chose to open an in-depth investigation into the SABMiller takeover, the deal could not receive clearance for up to 90 working days, a delay AB InBev may be keen to avoid.

Initial valuations for SAB’s Eastern European breweries varied widely, from $4-billion to $7-billion, based on multiples of earnings or price per volume.

Heineken, Carlsberg and Molson Coors could face antitrust problems of their own if they wanted to buy, unless the assets were sold separately.

Alternatively, Asahi might be looking for further European expansion or a private equity group could come in.

AB InBev said the disposal included a number of top brands in its markets, such as Pilsner Urquell in the Czech Republic and Dreher in Hungary.

The sale would be conditional on AB InBev concluding its purchase of SABMiller, expected in the second half of this year.

The divestment could ease regulatory approval, although Eastern Europe has not been part of AB InBev’s core business.

AB InBev’s interest in SABMiller is due to prize assets in faster-growing Africa and parts of Latin America, rather than expansion in Europe, where beer consumption per capita is already high.

After InBev’s 2008 takeover of Anheuser-Busch, the company sold its operations in Hungary, Romania, the Czech Republic and a handful of smaller Eastern European countries for $2.2-billion to CVC Capital Partners, as part of a deleveraging drive.

The business, including Staropramen lager, is now owned by Molson Coors. —