AB InBev offers to dispose of SABMiller’s Central, Eastern European brands as it seeks regulatory approval

Brewing giant, Anheuser-Busch InBev (AB InBev) has offered to sell SABMiller’s Central and Eastern European brands, including Pilsner Urquell as part of efforts to gain regulatory approval for its planned acquisition of SABMiller.

AB InBev submitted an updated proposal to the European Commission that included commitment to sell operations in Hungary, Romania, Czech Republic, Slovakia and Poland, the company said in a statement on Friday.

“Conservatively, I think you can get $6bn for this; I don’t think that’s an overly ambitious number,” said Javier Gonzalez Lastra, an analyst at Berenberg, by phone. It’s possible AB InBev could get even more for the business, perhaps 15 times the operating profit of about $460 million he added. That would amount to $6.9bn.

Eastern and Central Europe have never featured prominently for AB InBev. The brewer has little presence in the region except for Ukraine and Russia. The decision to sell has left analysts surprised as there are no antitrust overlaps. Andrew Holland, a beverage analyst at Societe Generale said: “There is no antitrust overlap that I can see. AB InBev has no presence to speak of in these countries. Perhaps the EU is looking at the pan-European market share.”

The businesses to be offered for sale includes Dreher Breweries in Hungary; Kompania Piwowarska in Poland; Plzensky Prazdroj, the brewer of Pilsner Urquell, in the Czech Republic; Ursus Breweries of Romania, SABMiller said in a separate statement.

“These assets include a number of top brands in their market and are expected to attract considerable interest from potential buyers,” AB InBev said.

Japanese brewer, Asahi Group Holdings is likely to be one of the suitors as it would complement the other brands they recently acquired from AB InBev (Peroni, Grolsch and Meantime brands). “Carlsberg A/S and Heineken, Nos. 1 and 2 brewers in Eastern Europe are unlikely to make a bid because they would certainly run into antitrust problems in almost every country,” said Andrew Holland at Societe Generale.

AB InBev expects European regulators to publish the first phase of their inquiry into the merger by May 24.

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