Palmâs sale of Polish brewer points to its vulnerability as acquisition candidate
- August 03, 2007
||company acquisition announced, August 2007;
||Browar Belgia Sp. z o.o. (Poland), minor domestic beer producer;
||Kompania Piwowarska SA (Poland), subsidiary of SABMiller plc, global brewing giant;
||Palm Breweries NV (Belgium), producer of specialty Belgian beers;
||acquiring new capacity, removal of competing brands;
||acceptable valuation, focus on domestic market, possibly financial problems;
||âthe value of the gross assets to be acquired is approx. âŹ 65 mlnâ.
Coming after Heinekenâs acquisition of Krusovice in the Czech Republic, reviewed earlier this year by Glenboden, this deal shows that smaller bolt-on acquisitions of local brands have value for the brewing majors, at least in central Europe. It also reveals Palm as another small brewer thatâs withdrawing from earlier expansion plans beyond its domestic market. At the same time the Palm brand gets noticed as a specialty Belgium beer, with internationalisation potential if acquired by a global group.
Browar Belgia is the fruit of an ambitious plan by Palm, in 1999, to build a large, ultramodern brewery in Poland and take advantage of a projected growth in demand for nichey, premium beers. By its own admission, however, this demand has been slower in coming than expected. Itâs instructive to note, also, that BB appears to have been the family-owned Palmâs first major investment outside Belgium.
Thereâs an intriguing discrepancy between the buyerâs and sellerâs announcements, with respect to rationale for the deal.
BB says that its brands fill gaps in Kampaniaâs own portfolio, being âin segments where KP is not presentâ. Some of the brands are laudably innovative. As well as Palmâs own top-fermentation offering, you have a ginger-flavoured sweet beer, Gingers, clearly aimed at women and younger drinkers, as well as a brave attempt, Frater, to create a monastery -themed wheat beer.
In parallel however, KPâs announcement doesnât say anything about developing BBâs brands. In a short statement, KP just says that BBâs brewery âwill provide additional capacity necessary to keep pace with the growing demand for KPâs products ... without the need to develop a greenfield sightâ.
The only financial information they provide is BBâs gross asset value, thus hinting that they paid no goodwill for the company. It could be that KP simply doesnât see any value in BBâs brands.
Weâd rather interpret âlack of goodwillâ as having more than one meaning, in this deal. In Wojak, BB created a masculine, strong beer brand that was clearly kicking at the heels of KPâs Debowe Mocne brand, in terms of positioning and pricing.
The same could possibly be said of Gingers, vis-a-vis KPâs own flavoured beer, Reddâs. So, maybe KP intends to ârestore orderâ in the market, by killing off these brands, which would explain the honesty in their deal announcement.
We at Glenboden are disappointed that Royal Unibrew didnât acquire BB, instead of KP. After their acquisition of Lomza, weâd tipped them to be the company to roll up all of Polandâs orphaned mid-sized beer brands and assets.
Possibly Unibrew had too much on their hands already in Poland, with not only Lomza but also Strzelec and Brok, to take BB on board as well. At the same time SAB is better placed to take a view on Palm itself as an acquisition candidate, in due course.