Private equity firms circle Pilsner Urquell

Long time, no hear regarding AB-InBev’s divestment of its central and eastern European assets, announced in April 2016. But at the end of July 2016 media reported that several US and European buyout funds are putting together bids, with some seeking to join forces to snap up assets worth up to EUR 7 billion (USD 7.7 billion).

The brewing businesses, based in the Czech Republic, Poland, Hungary, Romania and Slovakia, are for sale as part of AB-InBev’s USD 100 billion-plus takeover of SABMiller.

AB-InBev has offered to sell SABMiller’s entire European business to secure antitrust approval for the takeover.

The sale, led by investment bank Lazard on behalf of AB-InBev, is expected to kick off toward the end of September, media say. Obviously AB-InBev wants to finalise the SABMiller deal before starting negotiations for the business, which includes the Czech market leader Pilsner Urquell.

Most likely, AB-InBev wants to sell the companies as one lot and avoid a break-up, which would result in a piecemeal sale.

A rumoured forerunner is the European private equity fund Advent. Allegedly it has been conducting preliminary work for several months.

Private equity funds are keen to invest in central and eastern European beer brands as alcohol consumption in these markets remains strong, unlike in western Europe, where beer consumption has been declining.

Pilsner Urquell has about a 40 percent share of the Czech beer market, which has the highest per-capita consumption in the world. Other brands on the block include Dreher in Hungary, Tyskie and Lech in Poland, Ursus in Romania and Topvar in Slovakia.

Perhaps, Japan’s Asahi Group Holdings, which trumped private equity bids for Peroni, Grolsch and Meantime in February, may also enter the auction once it completes its proposed EUR 2.55 billion purchase.