Asahi Buys European Beers From AB InBev

The $7.8 billion acquisition of Pilsner Urquell and other brands continues the Japanese brewer's push to build its overseas business.
Matthew HellerDecember 13, 2016
Asahi Buys European Beers From AB InBev

Japanese beer maker Asahi has agreed to acquire a group of eastern European beer brands from Anheuser-Busch InBev for 7.3 billion euros ($7.8 billion), continuing its push to expand overseas to offset a shrinking domestic market.

The acquisition, which includes the Pilsner Urquell beer in the Czech Republic, Tyskie and Lech in Poland, Hungary’s Dreher, and Romania’s Ursus, will lift Asahi into third place in the European market excluding Russia, behind only Heineken and Carlsberg.

AB InBev is selling the brands to comply with the regulatory requirements of its $100 billion takeover of SAB Miller.

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Through the acquisition, “Asahi aims to establish a unique position as a global player, mainly focusing on a leading premium brand portfolio to achieve sustainable growth,” the company said in a news release.

As The Wall Street Journal reports, Japanese beer makers “have been looking overseas for growth because the domestic market is shrinking, owing to a population that is declining in number and growing older.” Sales of Asahi’s flagship Super Dry brand fell nearly 4% in the first 11 months of this year.

Asahi previously acquired some of SAB Miller’s other European brands, including Peroni and Grolsch, for 2.55 billion euros. In its latest deal, it paid a premium price to outbid private-equity firm Bain Capital, Switzerland-based Jacobs Holding AG, and PPF Group, an investment firm controlled by Czech businessman Petr Kellner.

According to Reuters, Asahi’s bid represents a multiple of 14.8 times EBITDA, which is higher than the 12 to 14 times brewing assets in mature markets often fetch.

“Asahi is heading in the right direction by expanding overseas, but the price seems too expensive,” Masayuki Kubota, chief strategist at Rakuten Securities, told the WSJ. “Investors will be watching whether Asahi can offer a reasonable explanation about the high price.”

The Czech Republic has the world’s highest per capita beer consumption but SAB’s European margins had been eroding amid price competition. Bernstein analyst Trevor Stirling said the rising popularity of premium and craft beers offers potential for growth.