AB InBev to sell more SAB assets as seeks EU deal approval

Fri Apr 29, 2016 8:35am EDT
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By Philip Blenkinsop

BRUSSELS (Reuters) - Brewing giant Anheuser-Busch InBev (ABI.BR: Quote) plans to sell the eastern European assets of SABMiller SAB.L, which could fetch almost $8 billion, as it seeks European regulatory approval for its $100 billion-plus takeover of its closest rival.

AB InBev has already lined up Japan's Asahi Group Holdings (2502.T: Quote) to buy SABMiller's Grolsch, Peroni and Meantime brands for 2.55 billion euros ($2.90 billion), and said on Friday it had put up for sale SABMiller's business in Czech Republic, Hungary, Poland, Romania and Slovakia.

AB InBev, maker of Budweiser and Stella Artois, has barely any business in eastern Europe outside Russia and Ukraine, so analysts say the sale is more about preventing regulatory delays and exiting weak spots than ensuring market competition.

Beer consumption in eastern Europe has been on the decline, due to shrinking populations, weak economies and tighter regulation. That makes the region much less attractive than the growth markets of Africa and Latin America that are driving what will be the biggest deal in consumer goods history.

"The eastern European markets may have provided an unwelcome and unnecessary distraction, and valuation notwithstanding, we regard this asset sale as a net positive" for AB InBev, said Morningstar analyst Philip Gorham.

He estimates a sale could fetch $7.75 billion, based on a multiple of 11 times expected 2016 operating earnings of $705 million, with Carlsberg CARLb.CO the most likely buyer, though it might face antitrust constraints in Poland.

Molson Coors (TAP.N: Quote) could have antitrust trouble buying the assets, following its purchase in 2013 of eastern Europe's StarBev from CVC Capital Partners [CVC.UL]. Heineken (HEIN.AS: Quote) might also face hurdles from competition regulators.

But SAB's business could be attractive to a private equity group or Asahi if it wanted further European expansion, analysts said.   Continued...

The logo of Anheuser-Busch InBev is pictured outside the brewer's headquarters in Leuven, Belgium February 25, 2016. REUTERS/Yves Herman