FDBusiness.com

North American beer group Molson Coors Brewing Company is significantly increasing its international business and exposure to emerging markets by acquiring StarBev from private equity firm CVC for Eur2.65 billion ($3.54 billion). Headquartered in Amsterdam, The Netherlands, and Prague, Czech Republic, StarBev operates nine breweries in Central and Eastern Europe (CEE) and generated sales of approximately Eur0.7 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) of Eur241 million in 2011. The purchase price represents a multiple of approximately 11 times EBITDA.

Molson Coors Brewing Company is one of the world’s largest brewers. The company’s operating segments include Canada, the US, the UK, and Molson Coors International (MCI). The company has a diverse portfolio of owned and partner brands, including signature brands Coors Light, Molson Canadian and Carling.

Peter Swinburn, president and chief executive of Molson Coors.

“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,” says Peter Swinburn, president and chief executive of Molson Coors. “The Central and Eastern European beer market is attractive, with strong historical trends and upside potential as the region returns to its pre-economic-crisis growth rates.”

He continues: “StarBev, as a market leader in the CEE region, provides Molson Coors with a great platform for growth and an excellent foundation from which to extend our key brands, such as Carling, into Central and Eastern Europe. Staropramen, StarBev’s international flagship brand, will also enhance our portfolio in some of our current and planned markets.”

StarBev, which employs about 4,100 people, has brewing operations in the Czech Republic, Serbia, Croatia, Romania, Bulgaria, Hungary, Montenegro and also sells its brands in Bosnia-Herzegovina and Slovakia. StarBev brews 13.3 million hectolitres annually and holds a top three market share position in each of its markets. Starbev’s portfolio of more than 20 brands includes local champions such as Borsodi, Kamenitza, Bergenbier, Ozusko, Jelen and Niksicko and also distributes brands such as StellaArtois, Beck’s, Hoegaarden, Lowenbrau and Leffe under license.

Following the acquisition, Molson Coors expects that significantly more of its revenue will come from growth and emerging markets. The CEE markets are expected to benefit from positive volume and per capita consumption trends over the long-term.

Molson Coors expects the transaction to be accretive to earnings in the first full year of operations and to generate approximately $50 million of pre-tax operational synergies by 2015, primarily through production efficiencies, procurement, systems and related areas.

The transaction is subject to approval by certain European competition authorities and is expected to close in the second quarter of 2012. Following the close, StarBev will be operated as a separate business unit within Molson Coors and will remain headquartered in the Czech Republic.