The US-Canadian brewer
Molson Coors Brewing Company
) has finally completed the acquisition of the East European brewer
StarBev from a private equity group CVC Capital Partners Limited,
following the approval from European authorities last week. The
deal was signed in early-April for approximately 2.65 billion euros
($3.54 billion), and the company had received approval from the
regulators in Serbia and Ukraine.
As announced earlier, StarBev has now become a separate business
unit of Molson Coors and is headquartered in the Czech Republic.
StarBev is re-named Molson Coors Central Europe, with Mark
Hunter as its Chief Executive Officer ('CEO'). Mark Hunter earlier
served as the CEO of Molson Coors UK & Ireland business.
Molson Coors Central Europe operates nine breweries and has a
workforce of 4,100 people. The unit has a strong portfolio of more
than 20 brands such as Borsodi, Kamenitza, Bergenbier, Ozusko,
Jelen and Niksicko, which it sells in the regions of Czech
Republic, Serbia, Croatia, Romania, Bulgaria, Hungary, Montenegro,
Bosnia-Herzegovina and Slovakia. Molson Coors Central Europe's
flagship brand Staropramen is also distributed in more than 30
Molson Coors expects the acquisition to benefit its earnings in
the first year of operation and improve the company's production
efficiencies, procurement and other systems, thereby leading to
approximately $50 million of pre-tax operational synergies by
It will enhance the company's portfolio with more than 20 new
brands including Staropramen. Moreover, it will improve the beer
volumes of Molson Coors, which have been on a decline since the
past few years.
We are encouraged by the company's shifting focus from the
growth markets to the fast-growing emerging markets. The developed
markets are saturated and are facing macroeconomic headwinds like
rising unemployment and declining spending, which is therefore
attracting these companies towards emerging markets like Europe,
China, India, among others. The economic outlook of these fast
growing nations is at present much better than the developed
markets, due to the improving standard of living of the middle
We currently have a Neutral recommendation on Molson Coors. The
stock has a near term recommendation with a Zacks #3 Rank (a
short-term Hold rating).
MOLSON COORS-B (TAP): Free Stock Analysis
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