US brewer moves into east Europe

Molson Coors Brewing is to buy East European brewer StarBev for €2.65bn.

The US brewer struck the deal with CVC Capital Partners as it seeks a greater presence in developing markets.

Molson Coors outbid rival Asahi Group of Japan, which was unwilling to pay more than €2.25bn for StarBev, according to sources.

With a portfolio of beers including Carling, Blue Moon and Coors Light, Molson Coors’ business is concentrated in the mature markets of the US, Canada and Britain. This deal will help lift the percentage of its revenue coming from outside those markets, the company said.

“The acquisition of StarBev fits squarely into Molson Coors’ strategy to increase our portfolio of premium brands and deepen our reach into growth markets around the world,” chief executive Peter Swinburn said.

StarBev has operations in the Czech Republic, Serbia, Croatia, Romania, Bulgaria, Hungary, Montenegro, Bosnia-Herzegovina, and Slovakia.

But the deal was not seen as solving all of Molson Coors’ problems — including slower growth in the US — and the company’s shares were down 1.5% in morning trade.

“While we believe gaining exposure to emerging markets is positive, we don’t anticipate much synergy potential in the acquisition,” said UBS analyst Kaumil Gajrawala. “Ultimately, the key to creating shareholder value is to grow in the US”

The deal is valued at around 11 times StarBev’s core 2011 profit, or EBITDA, of €241m, from annual sales of €700m. That is “well within the range of recent transactions,” according to Molson Coors chief financial officer Stewart Glendinning, but some analysts thought the price was high.

— Reuters