Fuller’s sells beer business to Asahi

United Kingdom | History is repeating itself. Thirty years after Mrs Thatcher’s Beer Orders, which forced integrated brewers to separate their beer and pub businesses, London’s family-owned brewer and pub operator Fuller’s, which is best known for its London Pride ale, is following in its peers’ footsteps. Like Bass and Whitbread before, Fuller’s decided to sell its beer business while keeping its 400 strong pub estate.

The transaction with Japan’s brewer Ashai, announced on 25 January 2019, values Fuller’s beer unit at GBP 250 million (USD 327 million), including debt (GBP 202 million in March 2018).

Under the terms of the deal, Asahi will obtain the Griffin Brewery in the London neighbourhood of Chiswick. Fuller’s will retain ultimate ownership of its brand name, while Asahi will hold the global license to use the trademark.

Fuller, Smith & Turner (Fuller’s), which dates back to 1845, is listed on the stock market, but about 50 percent of its shares and 75 percent of its voting rights still rest with descendants of Victorian brewing barons John Fuller, Henry Smith and John Turner.

Asahi intends to continue brewing at the Griffin brewery, Fuller’s said in its statement to the stock market. Fuller’s pubs will continue to stock Fuller’s beer under the terms of a long-term supply agreement.

Fuller’s said it would return between GBP 55 million and GBP 69 million (USD 72-90 million) of the sale proceeds to shareholders, including members of the Fuller and Turner families, and will also use some of the cash to fund the company’s pension scheme.

While Fuller’s has remained famous for its beer brands, the pub unit has come to dominate its earnings. The beer business only contributed an EBITDA of GBP 10.6 million to group profits of GBP 70.9 million in the year to March 2018. The transaction price values the beer business at 23.6 times EBITDA for the past financial year.

Asahi owns Japan’s top-selling beer, Asahi Super Dry, as well as a large portfolio of brands overseas that includes Peroni, Grolsch, Pilsner Urquell and the London craft brewer Meantime. Formerly owned by SABMiller, they were divested to Ashai by AB-InBev in 2016 for over USD 10 billion.

Along with the Griffin brewery, Asahi will also acquire the cider brewer Cornish Orchards, the craft beer company Dark Star Brewing, which was purchased by Fuller’s in only 2018, and Nectar Imports, a boutique drinks wholesaler.