Analysts are sceptical about the level of interest in StarBev

Analysts are sceptical about the level of interest in StarBev

Several analysts believe that CVC Capital will struggle to raise serious offers for its StarBev beer business if it is intent on selling up. Here, just-drinks looks at the market chatter. 

Unnamed banking figures, presumably seeking to gain a huge amount of personal self-worth from a sale of StarBev, have this week been feverishly whispering about interest in the Central & Eastern Europe-based brewing business. As it happens, I understand from another, er, unnamed source that there have indeed been a few people sniffing around StarBev.

However, no formal sale process exists at present and there are growing numbers of analysts who are sceptical about the whole saga.

It all began with a Wall Street Journal article citing sources as saying Anheuser-Busch InBev might be interested in buying StarBev back, two years after it sold the business to private equity group CVC Capital for an initial US$2.2bn - rising to $3bn depending on CVC's return on investment. Naturally, A-B InBev declined to comment.

By yesterday (23 February), it became easier to name those who might not be interested, although the Japanese came to the fore.    

Initially, it's important to remember that the brewing sector is inherently nosey. With StarBev now held privately, who wouldn't take a look at its books if they were on offer?

Beyond that, we get into the nitty gritty of who might actually want StarBev at this moment, and at what price.

Anheuser-Busch InBev has "a right of first offer" on the business. The assumption has been that A-B InBev is taking a sabbatical from Central & Eastern Europe, bar Russia and Ukraine, where it still operates with Sun InBev. One day it could go back, but the Budweiser brewer looks to have other things on its mind right now, such as improving sales in the US, maintaining its position in Brazil and expanding in China.

Still, to force A-B InBev to back away, any bidder for StarBev would "have to pay a premium to get access", one analyst told just-drinks. That looks unlikely given the current state of many of StarBev's beer markets, he said. 

Then, again, Kirin's acquisition of Brazil's Schincariol last year showed that Japanese brewers are not averse to paying a high price for privately-held assets. Asahi has never done a deal outside of Asia, but could it be tempted? It would be a questionable move.

Of other possible candidates, one analyst who did not wish to be named pointed out that Heineken, Carlsberg and SABMiller are already "all bleeding in Central & Eastern Europe". Their shareholders might baulk at higher exposure and, in any case, SABMiller and Heineken in particular could face competition issues, as detailed by a Reuters report on the matter. 

The analyst's view is that CVC may be "looking for a speedy exit and is trying to drum up interest by showing a bit of leg". But, if CVC is intent on selling up in the near future, it may have to be a "piecemeal sale", he said, with the Staropramen brand and individual country assets sold off separately.

For CVC's part, its exact intentions remain unclear. StarBev's CEO, Alain Beyens, told just-drinks in an interview published late last year: "There is clearly no agenda or timeline on a potential sale of the business by CVC."

In 2011, its flagship Czech business, Pivovary Staropramen, increased domestic volumes by 9% in a flat market. Net sales also rose by 9%, according to a separate report today.

Yet, the outlook for StarBev's core beer markets is uncertain. Weak consumer confidence and excise tax rises have damaged per capita beer consumption in Central & Eastern Europe in the last few years. SABMiller's MD for Europe, Alan Clark, told analysts this week that he thinks the worst is over, but he made clear how challenging the region is. 

It all suggests that a sale of StarBev at a satisfactory price will be difficult to achieve at present.