TORONTO – Molson Coors Brewing Company (NYSE:TAP) (TSX:TPX.A) will pay US$3.5 billion to acquire StarBev, giving the Canadian-American beer maker a new base in Europe and adding more brands to its portfolio of offerings.
The deal, announced from London where its European arm has its headquarters, will add nine breweries and 4,100 employees in several countries to Molson Coors, one of the biggest beer companies in the United States and Canada.
StarBev is a “strategically compelling” fit that simultaneously hits its sweet spot for acquisitions – delivering growth over three to five years – and gives it access to the increasingly healthy Eastern European beer market, Molson Coors CEO Peter Swinburn said on an investor conference call.
“StarBev is a market leader, with Top 3 market positions in all of the nine countries where it operates,” Swinburn said.
“The Central and Eastern European beer market is very attractive and StarBev as a leader in that space and provides Molson Coors with the ideal platform to capitalize on future growth in the region.”
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With the deal, Molson Coors picks up 16 owned brands, including Staropramen, “a high-quality Czech beer from the heart of Golden Prague, the city with more than 1,000 years of brewing tradition.”
Molson Coors expects the deal will add to its earnings in the first full year of operations and result in $50 million of synergies by 2015, reflecting a combination of cost reductions and business growth.
“The transaction is strategically compelling, financially attractive and immediately transforms Molson Coors’ growth profile,” Swinburn said.
The brewer’s percentage of revenue from markets other than the U.S., Canada and Britain will increase from low single digits to the low teens, “a significant and healthy change,” he added.
Swinburn noted that Eastern European markets have “strong historical consumption trends in a region where beer is the alcoholic beverage of choice.”
StarBev had sales totalling about US$1 billion last year and had US$322 million in profit, after adjustments.
Molson Coors is acquiring the business from CVC Capital Partners Ltd., a private equity firm that operates several funds that have owned StarBev since 2009.
StarBev chief executive Alain Beyens said he’s happy the European beer maker will become part of one of the world’s largest brewers.
“It has been great to work with CVC as we have developed and grown this business over the last few years. Their support has enabled StarBev to become a leading innovator of world-class brands. I am convinced Molson Coors will take StarBev to the next level of development and growth,” Beyens said.
The transaction is expected close in the second quarter of 2012, assuming it gets approvals from European competition authorities.
Following the close, StarBev will be operated as a separate business unit within Molson Coors and will be headquartered in the Czech Republic. It currently has headquarters in Amsterdam and Prague.
It has brewing operations in the Czech Republic, Serbia, Croatia, Romania, Bulgaria, Hungary, Montenegro and also conducts operations in Bosnia-Herzegovina and Slovakia.
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