Bohemian synergy

3 April 2012 By Quentin Webb

The North American brewer will pay $3.5 bln to enter central Europe. Savings are limited, the seller is probably making a packet, and Molson outbid a Japanese rival: all worrying signs. But while the region doesn’t promise huge growth, the prospects are better than home.

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On April 3, Molson Coors Brewing Company said it had agreed to buy StarBev, the central and Eastern European brewer, from private-equity firm CVC Capital Partners for 2.65 billion euros, or about $3.54 billion. Asahi, the Japanese brewer, had been an early front-runner to acquire the business, according to Reuters reports.

StarBev generated 241 million euros of EBITDA in 2011, on sales of nearly 700 million euros. Molson is targeting $50 million of “pre-tax operational synergies” by 2015 and expects the deal to close in the second quarter of 2012. StarBev will remain a separate business unit with its headquarters in the Czech Republic.

As part of the deal, Molson will issue 500 million euros of zero-coupon bonds due on Dec. 31, 2013, which are convertible into Molson stock at $51.68 a share. New York-listed shares in Molson Coors fell 2.6 percent by 14:20 GMT on April 3, to $44.49 a share.

CVC bought the business from Anheuser-Busch InBev, the world’s biggest brewer. That deal, which closed in December 2009, gave StarBev an enterprise value of $2.2 billion, with the seller entitled to future payments of up to $800 million depending on CVC’s return.

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Bohemian synergy

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