Molson Coors to buy Eastern European brewer StarBev

Molson Coors Brewing Company is close to making its biggest acquisition to date in a deal that will expand its business in Central and Eastern Europe and add a number of well-known local brands to its portfolio. The company received regulatory approval last week from the European Union’s Competition Commission to move forward with its acquisition of Prague-based StarBev for about $3.5 billion, beating out rival bids from other major international players, including SABMiller, Anheuser-Busch InBev, and Asahi.

One of the largest brewers in Central and Eastern Europe, StarBev owns nine breweries that cater to beer drinkers in the Czech Republic, Serbia, Croatia, Romania, Bulgaria, Hungary, and Montenegro. Molson Coors stands to gain StarBev’s roster of 20 leading local brands, including Staropramen, Borsodi, Kamenitza, Bergenbier, Ozujsko, Jelen, and Niksicko.

So what makes StarBev an attractive buy for Molson Coors? For one, StarBev is a market leader in three of the countries in its core market region and holds the #2 and #3 spots in others countries within the region. Central and Eastern Europe are also recovering from the economic downturn faster than more mature markets. The mainstream beer business in Canada, the US, and the UK, three of Molson Coors’ core markets, have been softening as beer drinkers are lured to try newly introduced artisan craft beers and spirits.

Molson Coors began testing demand in Central and Eastern Europe in 2010, inking an exclusive license with Moscow Brewing Company to make and distribute Coors Light in Russia. In 2011 it entered into a similar pact with Obolon to make and distribute Carling in the Ukraine, Eastern Europe’s second-largest beer market.

Although the StarBev acquisition isn’t its first foray into the region, it could prove to be its most fruitful as the deal is expected to boost Molson Coors’ earnings and, in the next three years, bring production efficiencies and improved procurement and other processes that could generate an estimated $50 million in pre-tax operational benefits.

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Photo by Dinner Series, used under a Creative Commons license.

Sylvia Lambert

Sylvia Lambert covers a slew of industries. She has been a writer and editor at Hoover's since 2009. Her former published work includes Herbs: Growing & Using the Plants of Romance, a 1999 Benjamin Franklin Award winner for agriculture and gardening, and Along the Garden Path.

Read more articles by Sylvia Lambert.

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