Molson Coors has confirmed a deal to acquire StarBev from private equity giant CVC for €2.65bn. The group gives the North American brewer a significant presence in the markets of Eastern Europe, where it has little brand presence currently.
Peter Swinburn, CEO of Molson Coors, noted: “This is very much about growth. Our [core markets] are flat and declining; these ones are growing.” He added: “The central and eastern European beer market is attractive, with strong historical trends and upside potential as the region returns to its pre-economic-crisis growth rates”. StarBev has operations in the Czech Republic, Serbia, Croatia, Romania, Bulgaria, Hungary and Montenegro.
Swinburn said the acquisition would help to increase profits and buying power, adding that his company would use StarBev to sell its own brands (such as Carling). The deal is expected to add to earnings in the first full year of operations, but Swinburn admitted that synergies would be modest (at 5% of sales) as “There’s no overlap”.
StarBev - which owns beer brands such as Bergenbier, Ozusko and Borsodi beer - has EBITDA margins of around 30% (double the level of Molson Coors), and also owns the leading brand in at least half of the markets it operates in. It generated sales of about $1bn last year, and sold more than 11 million barrels of beer.
The deal is being financed by $3bn in cash and debt, while Molson Coors will also issue a €500m convertible bond to CVC, which will allow the latter to benefit from any rise in Molson’s future share price.
NamNews - Wednesday 4th April 2012