Asahi buys former SABMiller assets

Asahi Group headquarters in Tokyo. The group has acquired AB InBev's central and eastern Europe beer business. Photo: Bloomberg

Asahi Group headquarters in Tokyo. The group has acquired AB InBev's central and eastern Europe beer business. Photo: Bloomberg

Published Dec 14, 2016

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Johannesburg - Tokyo-listed brewery and soft drinks maker Asahi Group on Tuesday acquired Anheuser-Busch (AB) InBev Central and Eastern Europe beer business for 7.3 billion euros (R106.19 billion) as the company looks to Europe for growth to offset its slowing home market.

Asahi said it would take over businesses previously owned by SABMiller in Poland, Hungary, Czech Republic, Slovakia and Romania. But the company did not disclose how it would fund the deal, and expected the purchase to be completed in the first half of next year.

According to the Brewers Association of Japan, beer consumption in the country has been steadily declining, partly due to the ageing population.

Last year, the volume of beer sold by the country’s domestic makers totalled 2.7 million kilolitres, down from the 4.8 m kilolitres sold in 2001.

Asahi is the largest of the 4 beer makers in Japan, enjoying a market share of 38 percent, according to Euromonitor International.

The deal comes two years after another Japanese brewer, Suntory Holdings, paid $14 billion (R192.42 billion) for the acquisition of US liquor maker Beam, making this deal the second biggest deal by a Japanese brewer.

Asahi said the deal would see the company expand aggressively across Europe and would compliment the group’s western Europe operations. “The target business is highly compatible with our existing business in western Europe, and will strengthen our business platform, allowing Asahi to grow sustainably across Europe,” the company said.

Under the terms of transaction, Asahi would take over AB InBev operations in 5 countries in central and eastern Europe which were owned by SABMiller prior to its acquisition by AB InBev. In April, Asahi said it had acquired two of SABMiller brands, Peroni and Grolsch, for £2 billion (R34.68 billion).

Read also:  AB InBev completes SABMiller acquisition

Sasha Naryshkine, an analyst at Vestact, said the transaction would give Asahi the global footprint the company desperately needed in the face of Japanese companies seeing a decline in volume sales.

“If you are in Japan and are looking at specific demographics and consumption patterns, then it makes sense for Asahi to get into Europe to drive future growth,” Naryshkine said.

AB InBev said it had put the assets up for sale as part of its successful plan to woo regulatory approval for its mega merger with SABMiller in the more than $100 billion deal that was clinched in October this year.

“In connection with its combination with SABMiller, AB InBev had made commitments to the European Commission to sell the Central and Eastern European business (CEE),” AB InBev said. The sale of CEE forms part of other agreements that saw AB InBev selling 59 percent of SABMiller’s stake in MillerCoors for $12 billion in the US to Molson Coors Brewing. The company also sold SABMiller’s 49 percent share in China Resources Beer for $1.6 billion.

Asahi said it aimed at establishing itself as a global player by focusing on a leading premium brand portfolio to achieve sustainable growth.

“Asahi’s strategy is to enhance its cash generating power through its international business by maximising synergies with its existing business in Europe, the second largest business platform next to its domestic operations, along with merging the brand power and cost competitiveness it has cultivated in Japan,” it said.

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