Denver brewing company Molson Coors has agreed to a $3.54 billion deal for the acquisition of European brewer StarBev.
Molson Coors, the exclusive brewer of Carling larger in the United States, will now add beer brands such as Staropramen, Ozusko, Bergenbier and Borsodi to its line-up, taking control of StarBev’s nine breweries in eastern and central Europe.
It will also take over StarBev’s distribution of Stella Artois, Hoegaarden, Leffe, Beck’s and Lowenbrau.
In addition to the acquisition of brewing and distribution operations, the deal with StarBev will also allow Molson Coors to sell brands like Carling in Eastern Europe.
The US brewer has set its sights on the European Union, aiming to take advantage of the vast market once it recovers from the current economic crisis, which has driven unemployment in the bloc to the highest levels since the introduction of the single euro currency in 1999.
Molson Coors chief executive Peter Swinburn said: "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."
Coming Out of Crisis
The United States economic crisis saw Molson Coors enduring similar market conditions as consumers drastically reduced their beer budgets. But with the US economy on the road to recovery, beer consumption is on the rise, with recent quarterly results showing positive signs for the brewer.
Since the global financial crisis began in 2008, the Denver brewer has been forced to make widespread budget cuts. On the back of a poor third quarter last year, in February, Molson Coors published better than forecast financial results, with Q4 profits up 35%.
The executive board estimates it will need to put up $3 billion in cash, with around $500 million in convertible debt to StarBev owners, private equity group CVC Capital Partners.
The deal is forecast to boost profit within the first year of the transfer, and should also bring in around $50 million in pre-tax savings over the next four years.
The sale is subject to approval by European Union regulators, which is expected to be finalized by Q2 of this year.
StarBev operations will retain its headquarters in the Czech Republic.
Key Statistics - Global Beer Market (source: MarketLine)
- The global beer market is expected to be worth over $523 billion by 2015, which represents an increase of almost 6% since 2010.
- By 2015, the global beer market is expected to produce a volume of 183 billion liters, 8.7% more than in 2010.
- Lager makes up the largest segment of the global beer market with some 57% of total value.
- Europe accounts for 44.3% of the global beer market value.
- The global beer market is fairly fragmented, with the top three players holding 41.1% of the total market volume.