Dreher is being sold

Anheuser-Busch InBev NV has offered to sell SABMiller PLC’s Central and Eastern European brands, including Pilsner Urquell, ahead of a decision by the European Commission on whether to approve its acquisition of the London-based brewer.

The assets could fetch around $5 billion, according to Exane BNP Paribas analysts, who estimate they made up about $2.3 billion in sales and $450 million in earnings before interest and taxes for SABMiller.

AB InBev is offering up all of SABMiller’s assets in Hungary, Romania, Czech Republic, Slovakia and Poland, which includes the rights to Pilsner Urquell outside the U.S. Within the U.S. AB InBev has already agreed to sell Pilsner Urquell to Molson Coors Brewing Co. as part of a larger deal divesting its stake in the American brewer’s joint venture with SABMiller.

The potential sale announced Friday would also include brands such as Polish beers Tyskie and Lech, Hungarian beer Dreher, and Romanian beer brand Ursus. Eastern Europe historically hasn’t been a major focus for AB InBev, whose brands there currently are distributed by Molson Coors, and the deal is aimed at mitigating concerns the European Commission could have about the pending merger.

SABMiller is currently the third-largest brewer in Eastern Europe, with a market share of roughly 15%, according to Euromonitor, while AB InBev trails behind with a share of 7.9%.

Carlsberg A/S and Heineken NV, the Nos. 1 and 2 brewers in Eastern Europe by market share, are unlikely to buy many of the assets due to regulatory hurdles, said analysts. Molson Coors also is seen as unlikely to be a buyer. Analysts instead pointed to Asahi Group Holdings Ltd. and private-equity firms as likely buyers.
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At AB InBev’s shareholder meeting this week, Chief Executive Carlos Brito said management was currently focused on two things: interacting with regulators and integration planning.

“Since day one, we said we’d be very proactive and up front with regulators to avoid any overlaps,” he said. “Of course, the final word is from the regulators.”

In addition to agreeing to sell SABMiller’s share of its joint venture in the U.S., AB InBev has taken a series of other steps to ensure its acquisition of SABMiller is waved through.

Earlier this month, the Belgian-based brewer accepted an offer from Asahi for its European premium brands Peroni and Grolsch, as well as British craft-beer brand Meantime.

AB InBev also recently reached an agreement with the South African government to create a $69 million investment fund and other commitments designed to help it secure regulatory approval for the deal there. South Africa’s Competition Commission recently asked for an extension of its review because it had concerns about the merger.

The European Commission, which is studying AB InBev’s pending deal to buy SABMiller, will make a decision on May 24. It could either wave the acquisition forward or lay out objections, pushing the deal into a so-called phase-two review, which can often be a long and difficult process. AB InBev has been aiming to clear the deal in the first phase of the commission’s review.

The AB InBev-SABMiller merger would create the world’s biggest beer group with about 30% of the global beer market.