just On Call - StarBev deal best use of our money - Molson Coors
Molson Coors bought StarBev for US$3.54bn
Molson Coors' buyout of StarBev was the best deal for shareholders, according to the head of the North American brewer.
In a conference call yesterday, investors questioned the US$3.54bn acquisition of the Czech brewer, asking if the money would have been better spent on dividends or share buybacks. But, Molson Coors CEO Peter Swinburn said the StarBev deal would satisfy shareholders in the long-term.
“Over the last three years, we have examined with our board the best way to use any cash we have and we’ve always judged the usage of that cash against shareholder return,” Swinburn said. “As we announced a year ago, we wanted to use that cash for share buybacks because there was no other option on the table.
“When StarBev came up it was an option at the price that we bought it at, which was 11-times EBIT. It really satisfied all the financial criteria we'd laid out.”
The call followed the release of Molson Coors' first-quarter results in which the company reported a 4.1% fall in net profits for the three months to the end of March, mainly due to its acquisition of the Staropramen brewer.
Last week, the company completed an issue of US$1.9bn in debt securities to help pay for the buyout.
Also in the call, David Perkins, head of Molson Coors Canada and global brand & market development, said the success of Coors Light Ice Tea has highlighted the company's premiumisation strategy.
Mainstream brands are on a downward trend, Perkins said, however Coors Light Ice Tea, a non-premium product, is commanding an attractive price index.
“Within our portfolio we want to push the premiumisation,” Perkins said. “Premiumisation is the growth of the above-premium segment but it is also the kind of innovation we do in the mainstream segment.
“So within the mainstream, to the extent that we can push higher price products, we will.”
For the company's first-quarter results announcement, click here.
As macroeconomic volatility, the mature versus emerging market narrative, the craft revolution coming of age and shifting demographics all radically reshape the alcoholic drinks battleground, innovati...
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