Molson Coors to Acquire StarBev for $3.54 Billion

StarBev brews 13.3 million hectoliters annually and holds a top three market share position in each of its markets. Starbev’s portfolio of more than 20 brands includes local champions such as Borsodi, Kamenitza, Bergenbier, Ozusko, Jelen and Niksicko and also distributes brands such as Stella Artois, Beck’s, Hoegaarden, Lowenbrau and Leffe under license.

4 April 2012 --- Molson Coors Brewing Company has signed a definitive agreement with StarBev L.P., to acquire StarBev for €2.65 billion ($3.54 billion). Headquartered in Amsterdam, The Netherlands, and Prague, Czech Republic, StarBev operates nine breweries in Central and Eastern Europe (CEE) and generated 2011 sales of approximately €0.7 billion ($1.0 billion) and earnings before interest, taxes, depreciation and amortization (EBITDA) of €241 million ($322 million). The purchase price represents a multiple of approximately 11x EBITDA.

“The acquisition of StarBev fits squarely into Molson Coors’ strategy to increase our portfolio of premium brands and deepen our reach into growth markets around the world,” said Peter Swinburn, President and Chief Executive Officer of Molson Coors. “The Central and Eastern European beer market is attractive, with strong historical trends and upside potential as the region returns to its pre-economic-crisis growth rates.

“StarBev, as a market leader in the CEE region, provides Molson Coors with a great platform for growth and an excellent foundation from which to extend our key brands, such as Carling, into Central and Eastern Europe. Staropramen, StarBev’s international flagship brand, will also enhance our portfolio in some of our current and planned markets.”

StarBev, which employs approximately 4,100 people, has brewing operations in the Czech Republic, Serbia, Croatia, Romania, Bulgaria, Hungary, Montenegro and also sells its brands in Bosnia-Herzegovina and Slovakia. StarBev brews 13.3 million hectoliters annually and holds a top three market share position in each of its markets. Starbev’s portfolio of more than 20 brands includes local champions such as Borsodi, Kamenitza, Bergenbier, Ozusko, Jelen and Niksicko and also distributes brands such as Stella Artois, Beck’s, Hoegaarden, Lowenbrau and Leffe under license.

Following the acquisition, Molson Coors expects that significantly more of its revenue will come from growth and emerging markets. The CEE markets are expected to benefit from positive volume and per capita consumption trends over the long-term.

Mr. Swinburn continued, “Making targeted acquisitions that expand our global presence and drive shareholder value is a key pillar of our stated growth strategy. We are committed to being disciplined buyers. We believe this acquisition, which is financially compelling and meets all of our return on capital requirements, is consistent with these goals.”

Molson Coors expects the transaction to be accretive to earnings in the first full year of operations and to generate approximately $50 million of pre-tax operational synergies by 2015, primarily through production efficiencies, procurement, systems and related areas.

Mr. Swinburn concluded, “StarBev is a strong brewing operation with great brands, talented management and employees who will benefit from being part of a global, brand-led brewing company that can bring additional innovation and marketing expertise to their operations. We have very exciting plans for growing this business and its brands. We are impressed with StarBev’s operations and look forward to working with the StarBev team to capitalize on the great opportunities in their markets.”

Alain Beyens, CEO of StarBev said: “We are delighted to become part of one of the world’s largest brewers. It has been great to work with CVC as we have developed and grown this business over the last few years. Their support has enabled StarBev to become a leading innovator of world-class brands. I am convinced Molson Coors will take StarBev to the next level of development and growth.”

The transaction is subject to approval by certain European competition authorities and is expected to close in the second quarter of 2012. Following the close, StarBev will be operated as a separate business unit within Molson Coors and will remain headquartered in the Czech Republic.

Molson Coors has committed financing in place to complete the acquisition. At current foreign exchange rates, permanent financing is expected to consist of $3.0 billion in cash and debt, and an additional €500 million ($667 million) in convertible debt issued to the seller, which enables them to participate in future upside. Molson Coors expects to maintain investment grade ratings following the close of the transaction.

Morgan Stanley & Co. LLC acted as lead financial advisor to Molson Coors. Barclays Capital and Deutsche Bank Securities acted as co-financial advisors. Morgan Stanley Senior Funding, Inc. and Deutsche Bank Securities are providing committed debt financing for the transaction. Kirkland & Ellis LLP acted as legal advisor to Molson Coors.