November 6, 2008 5:47 PM

A Mighty Thirst For M&A in the Beer Industry

Posted by Rachel Breitman

When it comes to the rapidly consolidating beer industry, it seems there are no boundaries. While M&A may be drying up in other industries, companies in the alcoholic beverage market appear to be particularly thirsty for joint ventures.

"With the exception of Prohibition, the beer business has always been a good business," one M&A lawyer representing beer companies told The Am Law Daily. "But the industry as a whole has become a global industry, so being a local or national player is not sustainable, unless you are a tiny craft brewery." 

With that in mind, North American brewer Molson Coors Brewing Company announced Wednesday that it had engaged in a cash-settled total return swap agreement with Deutsche Bank AG in August to acquire a 5 percent share of Australia’s largest brewer, Foster's Group Ltd. The announcement from Molson Coors comes some two months after Deutsche Bank first said it had acquired shares in Foster's, but refused to disclose on whose behalf it was acting.

R. Scott Falk, a corporate partner at Kirkland & Ellis, represented Molson in the matter, which some saw as the opening salvo in a potential takeover of the Australian company and its estimated $7 billion in beer assets. Falk previously advised Coors on its 2005 merger with Molson, and on the merged company's 2007 joint venture called MillerCoors with London's SABMiller, plc.

While Falk would not comment about Molson Coors's possible interest in acquiring more of Foster's, the Australian company's cryptic statement added to speculation about a potential union between the two brewers.

"Foster's has not been informed of the precise extent of Molson Coors' interest in the company nor their intentions with respect to that interest," the company said in the statement.

Meanwhile, in another sign that deals are flowing freely in the global beer market,  Dewey LeBoeuf announced that Dubai-based capital markets partner Federico Salinas had advised Efes Breweries International NV (EBI) in a joint venture with Heineken International to sell Heineken's Kazakh subsidiary, Dinal LLP to EBI's Kazakh subsidiary, Efes Karaganda Brewery JSC. The transaction gives the Dutch company a 28 percent interest in Efes Kazakhstan.

Also on tap: the $52 billion debt-financed takeover of St. Louis-based Anheuser-Busch Cos. Inc. by InBev N.V. The Belgo-Brazilian company said Wednesday that it would likely close the deal by the end of the year after a shareholder vote on November 12, and approval from various global regulators. InBev had been advised by Sullivan & Cromwell, Clifford Chance, and Linklaters,  and Anheuser-Busch  was represented by Skadden, Arps, Slate, Meagher & Flom and Simpson Thacher & Bartlett.
 

 

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