London - 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 $6 billion, 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 aren’t public. A sale process for the assets, which include the brewer of Czech lager Pilsner Urquell, is expected to start next month after SABMiller’s deal with Anheuser-Busch InBev closes, they said.
China Resources could go up against Japanese brewer Asahi Group and financial bidders, including Swiss investment group Jacobs Holding AG, Poland’s Kulczyk Investments SA and CVC Capital Partners, three of the people said. KKR & Company, Advent International Corp. and Mid Europa Partners may also bid, they said.
“The competition will be huge,” Duncan Fox, a London-based analyst at Bloomberg Intelligence, said by email on Wednesday. “At some point, CR Beer will want to move outside of China. However, so many names seem to be interested in these assets.”
Asset sales
AB InBev agreed to divest operations in Hungary, Romania, the Czech Republic, Slovakia and Poland to help secure regulatory approval for its about $100 billion 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 is open to acquisition opportunities and isn’t 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 didn’t immediately respond to requests for comment.
AB InBev already agreed to sell the Peroni, Grolsch and Meantime brands to Asahi for 2.55 billion euros ($2.9 billion). 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’s contributed to declining lager sales in Europe overall.
Rising profits
In March, China Resources agreed to buy out SABMiller’s remaining stake in the Snow beer venture for $1.6 billion in a deal that helped AB InBev secure Chinese antitrust approval.
SABMiller’s board unanimously 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 percent to 605 million yuan ($91 million) due to higher average selling prices, enhanced production capacity and reduced materials costs. The brewer’s sales for the six months ended June 30 dropped 1.8 percent to 15.2 billion yuan.
* With assistance from Thomas Buckley, Grace Huang, Sarah Syed and Rachel Chang
BLOOMBERG