London brewer hoping to sell its European beer brands

If the European Commission approves  Anheuser-Busch InBev’s merger with SABMiller PLC, the brewer will be putting its Eastern and Central European beer brands up for sale for as much as £4.8bn.

Up for grabs will be SABMiller’s assets in Poland, Slovakia, Czech Republic, Hungary and Romania. These include brands such as Polish beers Tyskie and Lech, Hungarian beer Dreher and Romanian beer brand Ursus. Also included in the sale are the rights to the Pilsner Urquell brand outside the United States.

The brands reportedly account for around £1.6bn in annual sales, with EBIT of £310m according to Exane BNP Paribas analysts, who have accordingly placed a valuation of £3.4 bn on the assets. However analysts at Morningstar say that as this year’s underlying earnings are forecast to reach £480m, the sale price is likely to be considerably higher than this figure.

Possible suitors include Asahi, Heineken and Carlsberg.

Part of the reason for the sale of course is to allay any antitrust fears the EC may have concerning the takeover, scheduled to complete in the second half of 2016.

SABMiller is the second largest brewer in the world, behind Anheuser-Busch InBev. In Eastern Europe SABMiller currently reigns as the the third-largest brewer with a 15 percent slice of the market. AB InBev has just 8 percent of the market. SABMiller’s Eastern and Central European beer brands were largely put together in a consolidation acquisition strategy around 20 years ago. Anheuser-Busch InBev does not seemed too concerned about losing its European business – what is really after is SABMiller’s growing and lucrative brewery operations in Africa.

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