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bne September 2017 Companies & Markets I 17
bne:Deal
Turkey’s Anadolu, AB InBev brew up merger to take on contracting Russian, Ukrainian markets
bne IntelliNews
Turkey’s leading brewer Anadolu Efes announced on August 9 that it has reached a non-binding agreement with Anheuser Busch InBev SA/NV (AB InBev), the world's largest brewing group, for a 50:50 merger of Anadolu Efes' and AB InBev's Russia and Ukraine businesses.
Both the Russian and Ukrainian beer markets have experienced years of decline, but analysts believe that the Ukrainian market at least is about to turn the corner and start to grow again.
In Russia, the main hope for growth rests with non/low alco- hol beer, as Russians increasingly adopt a healthier lifestyle. According to market intelligence provider Euromonitor Inter- national, the Russians consumed 7.68bn litres of beer in 2016, down from 10.3bn in 2011. The figures for the Ukrainians are 1.9bn litres in 2016 against 2.9bn in 2011, with a population about the third of the size of Russia’s.
AB InBev is the number two beer company in Russia, with a market share of 11.8% compared to the 31.8% of the number one, Carlsberg, Euromonitor’s figures show. Anadolu Group is number four with 8.5%. In Ukraine, Carlsberg leads with 28.6% with AB InBev slightly behind at 27.5%.
The merger announcement follows Belgium-headquartered AB InBev's acquisition of a 24% stake in Anadolu Efes as part of the former's combination with SABMiller, which completed in October 2016, the Turkish brewer added in a filing with the Istanbul stock exchange.
“In Russia the main hope for growth rests with non/low alcohol beer”
“This intended combination of the companies' operations in Russia and Ukraine would strengthen the competitive position of both Anadolu Efes' and AB InBev's brands in these markets, with the potential for further growth,” the filing added.
both Anadolu Efes and AB InBev would have equal representa- tion on the board of directors, with Tuncay Ozilhan, current chairman of the Anadolu Group and Anadolu Efes, serving as chairman.
It is expected that the transaction will be completed by the end of the first half of 2018. Until the completion of the transaction, both Anadolu Efes and AB InBev' businesses in Russia and Ukraine will remain separate and will continue business as usual.
The transaction is conditional on the completion of satisfac- tory due diligence and is subject to regulatory approvals in Russia and Ukraine.
Euromonitor International’s figures show that the Russian beer market is presently worth $7.9bn, down from $12.2bn in 2011, while the Ukrainian beer market is currently worth $1.87bn, up from $1.75bn in 2011.
Russian beer sales are forecast to continue contracting at a compound annual growth rate (CAGR) of -2%, the market research firm added, falling from 2016’s 7.68bn litres to 6.9bn litres in 2021. However, Ukraine’s beer sales are expected to expand at a CAGR of 2% and by 2021 will equal 2016’s 1.9bn
The name of the combined company is to be AB InBev-Efes and
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