BRUSSELS (Reuters) – Anheuser-Busch InBev (ABI.BR), agreed to sell breweries in nine eastern European countries to CVC Capital Partners on Thursday for an initial $2.23 billion, passing its target for divestments since its merger a year ago.
The sale is the third by the world’s largest brewer to a private equity company, after KKR’s purchase of South Korea’s Oriental Brewery and Blackstone LP’s (BX.N) of its U.S. theme parks, made possible by improved capital and equity markets.
AB InBev and CVC said in a statement that the price tag could rise to $3.03 billion depending on CVC’s return on investment, while AB InBev has the right of first offer to reaquire the business should CVC decide to sell in the future.
AB InBev has therefore pushed past the $7 billion goal it had set for divestments to help pay for InBev’s $52 billion takeover of U.S. rival Anheuser-Busch completed last November.
The brewer of Budweiser, Stella Artois and Beck’s has now actually raised a potential $9.5 billion after sales of assets in South Korea, China, Scotland and Ireland as well as packaging and theme park businesses in the United States.
AB InBev, which took the number one spot back from SABMiller Plc (SAB.L) last year, said CVC would be acquiring its operations in Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, Romania, Serbia and Slovakia.
Analysts said the business was put up for sale as AB InBev did not have key positions in any large beer markets, while competition in some of these markets from SABMiller and Heineken (HEIN.AS) meant a bid from the world’s second and third largest brewers was unlikely for anti-trust reasons.
AB InBev is the leading brewer by volume in Serbia, Croatia and Montenegro, number two in the Czech Republic to SABMiller, number two in Bulgaria to Heineken and number three in Hungary and Romania behind Heineken and SABMiller.
“We are pleased to announce this transaction which enables us to exceed our stated commitment to achieve $7 billion in divestitures,” said AB InBev Chief Executive Carlos Brito.
AB InBev shares edged 0.5 percent higher to 33.24 euros by 0815 GMT.
As part of the transaction, CVC, which owns over 50 companies worldwide from motor racing’s Formula One to luggage group Samsonite, had raised $1 billion of senior debt financing from a group of banks.
The deal, which was expected to close by January 2010, is comprised of a $1.618 billion cash payment, a $448 million unsecured deferred payment obligation with a six-year maturity and interest of 8 to 15 percent and $165 million in minority interests, assuming market value at Wednesday’s close.
Barclays Capital and Lazard acted as financial advisers to AB InBev and Clifford Chance as legal adviser. Freshfields acted as legal counsel to CVC.