UK: Sale may split Cobra Beer
Cobra Beer is circulating a sales memorandum to potential buyers, declaring its willingness to split its UK and Indian businesses, sources close to the situation have confirmed to just-drinks.
The memo states that Cobra would consider offers for the business as a whole or for the individual UK and Indian divisions.
Cobra founder Lord Bilimoria has received "robust interest" in the group, the source said today (11 December), declining to name specific parties. It is understood that the brewer has not named a price.
Cobra, which brews beer in India and also sells to restaurants, bars and retailers in the UK, said two weeks ago that it "is looking at a strategic partnership or a sale in order to achieve the full potential of the business".
Sales of Cobra in the UK have been growing at between 30-40% in volume over the last three months, and closer to 40% in value, according to company data.
Several drinks firms have been touted as potential buyers, with recent speculation centred on SABMiller, as one of the only major brewers not involved in a takeover deal. It also has a strong presence in India, with a 38.5% beer market share, and a growing business for international lagers in the UK.
just-drinks understands that the group is lukewarm about a deal, however, having initially looked at Cobra's business several years ago. SABMiller India CEO Jean-Marc Delpon de Vaux also said last month that the brewer's focus in the country was more toward consolidation of existing assets, rather than acquisitions.
Cobra has an estimated 1% share of the Indian market, something which may interest Vijay Mallya's United Breweries, the market leader and SABMiller's main rival in the country.
In the UK, Diageo entered talks with Cobra earlier this summer about a potential 25-30% stake in the business for an initial down payment of around GBP25m (US$37.2m), including an option of increasing its share at a later stage.
Sources familiar with the situation have told just-drinks that negotiations broke down.
A report in today's Financial Times newspaper quoted a possible price of GBP185m for the entire Cobra business, based on recent M&A deals in the sector.
Molson Coors rescued Cobra Beer from administration late last week, picking up a 50.1% stake in the company's UK operations....
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