Asahi proposes sale of beer and cider brands in bid to seal $16bn Carlton deal

Japanese drinks giant Asahi has offered to divest brands it would acquire through purchasing Carlton & United Breweries, including Stella Artois and Strongbow, in a bid to appease competition regulators.

Carlton & United Breweries (CUB), the Australian subsidiary of brewing powerhouse AB InBev, currently owns beer brands including Stella Artois and Beck’s. The Australian company also has rights to the Strongbow brand, which in other countries is owned by Dutch brewer Heineken.

Asahi, which announced its intention to acquire CUB for AU$16 billion in 2019, has offered to divest these brands, as well as CUB’s Little Green and Bonamy’s cider brands, to satisfy regulations.

It follows the publication of a preliminary report on the proposed deal by the Australian Competition and Consumer Commission (ACCC) in December last year.

In this report the ACCC expressed concern that a combined Asahi-CUB would control the Somersby, Strongbow, Mercury and Bulmers cider brands, which together account for around two thirds of cider sales in Australia.

The commission said they were concerned that the acquisition “may lead to higher cider prices”. It also was worried that the growth of Asahi in Australia, via the purchase of CUB, would mean that it would no longer act as a competitive constraint on the two largest beer companies in the country: Lion and CUB.

The ACCC has now opened a consultation after Asahi’s offer to divest brands to approved companies. Interested parties have until 18 March 2020 to make a submission.

ACCC chair Rod Sims stressed that Asahi’s actions and the opening of the consultation “should not be interpreted as a signal that the ACCC will ultimately accept the undertaking and clear the transaction”.

“We are following our usual practice of publicly consulting on a proposed divestment package,” he said. “We are seeking feedback from industry participants on whether the divestment package will be sufficient to address the competition concerns.”

A statement from Asahi said the company welcomed the opening of the consultation, and that it had been “working closely” with the ACCC and has proposed undertakings which address the its preliminary concerns.

Chairman of Asahi Beverages, Peter Margin, added: “We understand and respect that the ACCC must undertake a thorough process to ensure that the deal does not reduce competition and is in the interests of consumers. Asahi’s acquisition of CUB is a significant one and we have always expected that the review process would take some time.”

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