MONTREAL – Molson Coors Brewing Company says it has received regulatory approval from the European Competition Commission for its US$3.5 billion acquisition of StarBev that is set to close this month.
The approval follows regulatory nods from the competition commission in Serbia and the Anti-Monopoly Committee of Ukraine.
“We continue to be impressed with the StarBev team and operations, and expect to hit the ground running upon closing this highly compelling transaction,” said Molson Coors CEO Peter Swinburn.
Montreal and Denver-based Molson Coors last month completed a US$1.9 billion offering in debt securities that will be used to finance the acquisition.
The brewer is looking to offset declining North American beer demand by acquiring the leading Central and Eastern European beer maker. The deal will add nine breweries and 4,100 employees in several countries to Molson Coors, one of the biggest beer companies in the United States and Canada.
The deal will offer Molson Coors better growth opportunities especially in the Czech Republic, the largest per capita beer consumption market in the world. But beer consumption in these new markets has been volatile in past recessions and many parts of the eurozone are in recessionary mode.
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With the deal, Molson Coors picks up 16 owned brands, including Staropramen, “a high-quality Czech beer from the heart of Golden Prague, the city with more than 1,000 years of brewing tradition.”
Molson Coors (NSYE:TAP, TSX:TPX.B) expects the deal will add to its earnings in the first full year of operations and result in $50 million of synergies by 2015, reflecting a combination of cost reductions and business growth.
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StarBev had sales totalling about US$1 billion last year and had US$322 million in profit, after adjustments.
Molson Coors is acquiring the business from CVC Capital Partners Ltd., a private equity firm that operates several funds that have owned StarBev since 2009.
Following the close, StarBev will be operated as a separate business unit within Molson Coors and will be headquartered in the Czech Republic. It currently has headquarters in Amsterdam and Prague.
It has brewing operations in the Czech Republic, Serbia, Croatia, Romania, Bulgaria, Hungary, Montenegro and also conducts operations in Bosnia-Herzegovina and Slovakia.
Molson Coors shares lost 40 cents at C$40 in Wednesday afternoon trading on the Toronto Stock Exchange.
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