Asahi has bought AB InBev’s eastern European beer brands for more than $10billion in the largest overseas beer deal by a Japanese brewer.
The deal includes Pilsner Urquell from the Czech Republic, Poland’s Tyskie and Lech, Hungary’s Dreher and Romania’s Ursus. AB InBev brokered the deal to ease clearance from competition regulators for its $100 billion takeover of SABMiller.
The brands expand Asahi’s European footprint following the acquisition of SABMiller’s western European brands Peroni and Grolsch.
“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,” Asahi said.
Reuters notes: “Asahi said on Tuesday that the business had annual earnings before interest, tax, depreciation and amortization (EBITDA) of 493.8 million euros in the year to the end of March.
“Based on that figure, its bid represents a multiple of 14.8 times, which is higher than the 12 to 14 times brewing assets in mature markets often fetch.
“It paid about 15 times EBITDA for Peroni and Grolsch, its first foray into Europe, fueled in part by synergies with its existing business in Australia.”
The deal will give Asahi a 9% of the European beer market excluding Russia. Eastern Europe is a particularly thirsty market: the Czech Republic has the world’s highest per capita consumption.
However, Bernstein analyst Trevor Stirling warns they’re “very tough (markets) and profits have been declining, not growing.”
Investors were hesitant about the news and how the deal will be funded: Asahi shares fell more than 6% before closing down 4.6%.
“Asahi is heading in the right direction by expanding overseas, but the price seems too expensive,” Masayuki Kubota, chief strategist at Rakuten Securities, told the Wall Street Journal. “Investors will be watching whether Asahi can offer a reasonable explanation about the high price.”
