Sector News

Asahi taps European beer market with $7.8bn AB Inbev deal

December 14, 2016
Consumer Packaged Goods

Asahi is set to become the third largest player in the European beer market following a $7.8bn deal with Anheuser-Busch InBev to buy five Eastern European beer brands including Pilsner Urquell.

The bumper deal is the Japanese brewers second major move to tap the European beer market by taking advantage of a beer capacity sell off from AB Inbev in the wake of its £79bn takeover of SABMiller.

In addition to the popular Pilsner brand Asahi will pay 50pc above the expected price tag to pick up Poland’s Tyskie and Lech beers as well as Hungary’s Dreher and Ursus from Romania.

The spending spree means Asahi is set to clinch 9pc of the European beer market, following Carlsberg and Europe’s largest beer-maker Heineken.

The multi-billion pound bid is 14.8 times the annual EBITDA of the brands and builds on its €2.55bn deal earlier this year in which Asahi lapped up Peroni and Grolsch from SABMiller in its first bid to establish a presence in the international market.

But Rothschild’s Akeel Sachak, who advised Asahi on the deal, said the acquisitions are part of a transition that Asahi “had to make at some point to move from being a Japanese brewer to a genuinely global brewer”.

“This requires having genuine scale outside of Japan and that’s what this transaction delivered for them,” Mr Sachak said.

Jonathan Buxton, partner and head of consumer at Cavendish Corporate Finance said the deal is indicative of the growing thirst among Japanese brewers for international market share as Japan’s domestic market shrinks.

“Acquiring recognised beer brands in Europe, including Pilsner Urquell which holds the top spot in terms of market share in the Czech republic, will provide international influence for Asahi, which has set aside close to $4bn dollars for overseas acquisitions,” he said.

“Consolidation in the brewing business is accelerating, and we can expect cash rich Japanese buyers to continue their ambition growth strategies by pursuing overseas acquisitions,” he added.

In the face of a declining domestic market Asahi is willing to pay a high price to pounce on opportunities in Eastern Europe which are a safer bet than Western European beers which are under threat from a rising thirst for craft beer, cocktails and spirits.

Mr Akeel added that the being able to attract and retain some of the best management in Europe through the deals was also key benefit for the company as it grows its European presence.

By Jillian Ambrose

Source: Telegraph

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