The Czech Republic: The Czech Republic’s Plzeňský Prazdroj up for sale among other SABMiller assets

Czech brewing jewel Plzeňský Prazdroj is going up for sale. That’s the result of the go ahead from the European Commission to the massive worldwide beer deal under which global market leader InBev acquires its nearest rival SABMiller. Plzeňský Prazdroj has been in the hands of South Africa’s SAB since 1999, Radio Prague reported on May 26.

Competition watchdogs in Brussels have in fact ordered InBev to offload almost all of SABMiller’s European portfolio after looking aghast at the possible impact on the market and the likelihood that curbed competition would force up beer prices.

InBev had initially wanted to hold onto its Czech and Central European assets but they came onto the table when the European Commission maintained that its initial list of concessions were insufficient.

Plzeňský Prazdroj accounts for around a third of beer sales on the Czech market. The brand and brewery was SABMiller’s most profitable in Central Europe and had built up strong export sales across the continent. Operating profit for 2015 came to 183 million euros.

According to industry observers, the Czech assets could be sold as part of a Central European package or on their own. InBev has some time to play with, it is due to take over the SABMiller assets by the end of the year.

The most likely takers, European leading brewers Heineken and Carlsberg, are likely to face the some sort of worries and qualms from the competition authorities that sparked the original forced SABMiller sell-off in the first place.

That could, according to some analysts, open the way for Asian breweries to snap up some more European brands. Japan’s Asahi has already been active in the recent past with such purchases.

As well as breweries, investment and pension funds are also reckoned to be possible buyers given the low risk steady earnings potential of beer producers and fact that low interest rates make almost any asset with moderate earnings a potential investment option these days.

Plzeňský Prazdroj on its own could fetch around 60 billion crowns according to some analysts. The Lobkowicz brewery group, reckoned to be the fourth biggest brewery group in the Czech Republic, was last year sold to Chinese investor Lapasan for 1.9 billion crowns.

Lobkowicz’s total annual production is around a tenth of Plzeňský Prazdroj’s and lacks the brand names and export markets that Prazdroj has developed over many decades.

26 May, 2016