CVC toasts $3.5bn brewery exit

CVC has agreed to sell StarBev, which brews and distributes beer brands including Staropramen, Stella Artois and Beck's, to trade buyer Molson Coors.

CVC Capital Partners has signed a definitive agreement to sell brewery operator StarBev to Canada’s Molson Coors Brewing Company for $3.5 billion, the firm said in a statement. Return details were not disclosed.

Molson Coors beat competition from other trade buyers including Japanese drinks group Asahi, which tabled a bid in the region of $3 billion, according to a source close to the sale. StarBev had been the subject of continued unsolicited interest from more than one major trade buyer ever since CVC’s investment three years ago, the source said.

CVC is maintaining an interest in the business through convertible debt worth $667 million issued to the London firm as part of the deal, enabling it to participate in future upside, according to a Molson Coors statement.

CVC bought the Central and Eastern Europe (CEE) assets of brewing giant Anheuser-Busch InBev for an enterprise value of $2.2 billion in December 2009, renaming the business StarBev. The deal included additional rights to a future $800 million payment contingent on CVC’s return on its initial investment, though CVC declined to comment on whether its return had activated the payment.

StarBev operates nine breweries in CEE and generated sales of nearly €700 million and earnings before interest, taxes, depreciation and amortization of €241 million in 2011, according to CVC.

StarBev’s portfolio of more than 20 beers includes its flagship Staropramen brand and a host of local brands in the CEE region, while it also distributes international brands such as Stella Artois, Beck’s, Hoegaarden, Lowenbrau and Leffe under license from Anheuser-Busch InBev.

The business employs approximately 4,100 people, brews some 1.3 billion litres of beer annually and holds a top 3 market share position in each of its markets, CVC said. 

Starbev provides Molson Coors with a foundation from which to extend its key brands such as Carling into the CEE region, while the Staropramen brand will also enhance Molson Coors’ portfolio in some of its current and planned markets, said Molson Coors chief executive Peter Swinburn in a statement.

“The CEE beer market is attractive, with strong historical trends and upside potential as the region returns to its pre-economic-crisis growth rates,” he said. 

Following the sale, StarBev will be operated as a separate business unit within Molson Coors and will be headquartered in the Czech Republic.

Nomura International acted as financial advisor and Freshfields Bruckhaus Deringer acted as legal advisor to CVC and StarBev.