CVC Capital in Bid for Anheuser-Busch InBev ECE Operations
Two private equity groups - CVC Capital Partners and TPG - are the two private equity funds which remain in the running to acquire the Eastern and Central European assets of Anheuser-Busch Inbev in a bidding process which closed on July 27.
CVC, as reported in the Belgian daily de Tijd, has offered USD 2.1 billion for 11 breweries in Bulgaria, Romania, Hungary, Croatia, Czech Republic, Serbia and Montenegro. Anheuser-Busch Inbev's Russian and Ukrainian operations, which account for some 14% of the company's global sales, are not part of the deal. Some 6,000 workers are employed at the operations in these seven countries.
A-B Inbev, the world's largest brewer, still needs USD 4 billion in cash to pay down debt it took on to fund the USD 52 billion purchase of Anheuser-Busch last year, only partially funded through a rights issue. With other global brewers strapped for cash, that left only the buyout funds as a possible source of ready cash. Five showed initial interest in the ECE deal, but the list was whittled down to two.
In May, AB Inbev sold off its Korean brewers, Oriental Brewery, to KKR for USD 1.8 billion. Details of the financing remain murky - and the company has the right to buy it back after 5 years on undisclosed terms.
Luxembourg-based CVC, one of the five top global buyout funds, currently has a portfolio of 52 companies employing some 447,000 employees worldwide. Fundraising slowed marginally last year, though it raised the biggest ever Asia/Pacific buyout fund, but CVC is flush with cash. The problem is bank financing and diminished bank appetite for buyout deals.
According to de Tijd, CVC is negotiating with 13 banks for some 700 million euros in loans - meaning it would still have to shell out a large bit of its own cash to purchase the shares.
In the IUF sectors, CVC (together with Nordic Capital) gutted the Finnish confectionery company Leaf and its role in the destruction of UK retailer Debenhams (on this site dissected here) is a textbook case of predatory private equity financial vandalism.
Union action in Korea in 2007 played an important role in derailing a potential CVC acquisition of Coca-Cola's South Korean bottling operations.