- Sale to kick off later this year or early 2021
- Asahi and Carlsberg eyed as logical CEE suitors
- Comparable deals at 10x-plus EV/EBITDA multiples
Brewery group Molson Coors has appointed Bank of America to conduct a strategic review of its businesses globally, with a disposal of its European operations heavily anticipated, according to several sources familiar with the situation.
The Denver, Colorado-headquartered company, which owns European beer brands including UK-brewed Carling and Czech pilsner Staropramen, could begin a sale process towards the end of the year or beginning of 2021, four sources said.
Molson Coors and Bank of America declined to comment.
Representing less than 20% of global sales, the European division, operating in the UK and CEE, has long been talked about as an eventual sale candidate, as previously reported by this news service.
However, sources spoken to by this news service differed on their view as to whether a full or piecemeal sale would find favour and unlock most value for Molson Coors.
In either case, with CEO Gavin Hattersley having described the company’s 1Q20 results as being “disproportionately affected” by the coronavirus pandemic, Molson will have to wait at least until the end of the summer to see how lockdown easing measures across European markets translate into demand before launching any process, one of the sources said.
Molson Coors’ 1Q20 net sales in Europe dropped by 15.5% to USD 317.6m year-on-year, while global net sales were down by 8.7% to USD 2.1bn, according to its latest results. Its European underlying EBITDA registered a loss of USD 4.1m, compared to income of USD 13.5m in the previous year. Globally, its underlying EBITDA dropped 16.6% to USD 352.2m during the period.
The company pointed to pandemic-related bar and restaurant closures regarding the dip in performance.
Sale scenarios: whole or piecemeal?
To optimise value, selling the portfolio as one entity, rather than splitting its UK and CEE operations, would generate more interest from financial and strategic suitors alike, one of the sources argued.
In this scenario, private equity houses would be the most likely bidders, another source added, as large strategic bidders could run into antitrust issues.
However, the UK and CEE businesses are distinct, as previously reported by this news service. CEE is a relatively atomised market, with each country having different brands and marketing approaches. The UK business also has its own production facilities which it does not share with other European markets, one of the sources said. Brexit’s potential impact on supply chains and the risk of tariffs between the UK and EU markets may make British-based production facilities attractive for those wanting exposure to the territory, this source added.
by Katka Krosnar and David Friday in Prague, Min Ho, Deane McRobie and Virginia Garcia Martinez in London, Emily Fasold in Chicago, and Bhavna Kaul in New York, with analytics by William Cain