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Carlsberg Seen as Most Likely Buyer of Peroni and Grolsch

  • AB InBev could raise $3.2 billion by selling SABMiller brands
  • Purchase would be Carlsberg's first acquisition under new CEO

Carlsberg A/S is regarded by analysts as the most obvious buyer of the Peroni and Grolsch brands, which could fetch Anheuser-Busch InBev NV as much as $3.2 billion as the brewer divests parts of SABMiller Plc.

The Copenhagen-based beermaker has the most firepower to acquire the brands and a deal would complement its business in the U.K., Italy and the Netherlands, Andrew Holland, an analyst at Societe Generale, said by phone. Carlsberg could afford the bulk of what’s on offer, simplifying the sale process for AB InBev, Holland said.

The premium brands were put on the block as AB InBev attempts to offset potential competition issues in Europe arising from its $110 billion acquisition of SABMiller. A purchase would be the first for Carlsberg Chief Executive Officer Cees ’t Hart, who has been revising strategy and cutting jobs since joining the company in June. It would be a new growth push for the brewer, which announced plans to cut about 2,000 jobs last month as the Russian economic downturn weighs on profit.

“In general, mergers and acquisitions is not on our agenda as we focus on strengthening our business organically,” Kasper Elbjorn, a spokesman for Carlsberg, said by phone.

Carlsberg fell 1.1 percent to 596 kroner in Copenhagen as European markets tumbled after the scale of additional stimulus from the European Central Bank disappointed some investors. AB InBev closed down 3.6 percent at 117.10 euros in Brussels while SABMiller was little changed at 4,041.5 pence in London.

New Charter

The Carlsberg Foundation, which owns the brewer, changed its charter at the end of 2013 to enable the company to pursue investment opportunities, such as acquisitions. Carlsberg has said it’ll update shareholders in the first quarter of 2016 on its strategy to reignite growth.

“If the assets are for sale now, Carlsberg will presumably want to put their hands up,” Societe Generale’s Holland said. “I don’t think the strategic review would prevent it.”

Suitors for SABMiller’s brands may also include Japanese brewers Kirin Holdings Co. and Asahi Group Holdings Ltd. Tokyo-based Kirin is the more leveraged of the two and has historically been more focused on acquiring assets in emerging markets, said Trevor Stirling, an analyst at Sanford C. Bernstein. Asahi has greater financial flexibility and could be interested in European assets, he said. Nobody was available at the companies’ headquarters when called after normal business hours.

Heineken NV, the world’s third-largest brewer, is unlikely to bid for Peroni and Grolsch as a deal would come under scrutiny from antitrust regulators, analysts said. Heineken and Grolsch would have a combined 52 percent market share in the Netherlands, according to Stifel analyst Mark Swartzberg. Heineken declined to comment.

Debt Position

Carlsberg’s net debt-to-adjusted-Ebitda ratio of 2.97 has been rising since 2010, and it aims to reduce that to less than 2.5 by the end of this year. Still, the Danish brewer had cash and equivalents of 3 billion kroner ($453 million) at the end of September.

AB InBev, the world’s largest brewer, has said it will proactively address competition concerns arising from the acquisition of SABMiller, which will see one in three beers sold worldwide sold by the combined entity. Last month, the Leuven-based beermaker agreed to sell SABMiller’s stake in MillerCoors to Molson Coors Brewing Co. for $12 billion, giving Molson Coors full control of the joint venture.

Peroni and Grolsch could be worth a combined $3.2 billion based on a 15 times earnings multiple, Stifel’s Swartzberg wrote in a note last week, also saying that Carlsberg is the most likely buyer of the assets.

Meantime Brewing Co., a London-based so-called craft brewer acquired by SABMiller in May, is also being sold by AB InBev. Meantime could draw interest from Carlsberg amid a push from mainstream brewers to acquire smaller brands.

“There is an opportunity to play a more regional role and we’ll decide by the end of this year on what weapons we can use to fight or grow with the craft beers,” ’t Hart said in an interview last month.

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