Glenboden M & A Originations

Assessment of Van Pur as a divestment candidate in Poland

Priority Rating priority rating 5
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Origination Status tender underway, June 2013
Asset Van Pur S.A. (Poland), no.4 domestic brewing group
Buyer candidates include San Miguel, Molson Coors
Seller 2 main shareholders (>70% of shares)
Buyer Rationale no.4 beer market in Europe, turnaround opportunity
Seller Rationale future loss of value owing to economy segment positioning
NBs in total 6 individuals own Van Pur
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Van Pur, Poland's no.4 brewing group and largest independent player, is on the block. Given the attractiveness of the Polish market, and lack of good acquisition candidates globally at this time, the transaction should attract the interest of 'second-tier' international beer groups. But how valuable is Van Pur, and why are the owners selling at this time ?

Attractive Polish beer market ...At 3,6 bln litres, or 95 l. per capita, Poland is Europe's fourth largest beer market. In recent years a premiumisation trend has been stimulated by independent, 'craft-regional' brewers like Ciechan, Gontyniec and Sulimar.

Growth has also been created latterly by increased consumption amongst female consumers, and the related development of flavoured beers, shandy and, most recently, cider.

Van Pur is the no.4 player, and largest independent brewer in a market 85% dominated by three global groups - SABMiller, Heineken and Carlsberg. So, it should attract buyer interest from 'second-tier' international groups not obsessed with being no.1 or 2 in every market.

... mixed brands and businesses ...But scratch beneath the surface and you'll see a group with five breweries scattered around Poland, as a result of acquisitions over the last decade, that clearly has significant problems of portfolio integration.

Van Pur has a mixed bag of over 20 brands; mostly regional in sales reach or specialty -flavoured. Arguably, the only national brand of value in the portfolio is Łomża, which has benefited from significant marketing support.

This unwieldy portfolio is the legacy of opportunistic acquisitions around Poland. In 2005 Growary Górnośląskie in Silesia; in 2011 BROK on the north-west coast, and the remaining shares in Łomża in the south-east (from Royal Unibrew).

... why are owners selling now ?In Poland there's a thin line between premium craft-regional beer, and cheap brews (private label or otherwise) sold through the burgeoning discount chains. Van Pur seems to have landed in the latter camp.

The group admits to being the largest producer of private label beer in Poland. In our view, that's why the two main owners (together >70% of shares) are seriously looking to sell; hiring PWC to run a tender. They see that economy segment beer is Van Pur's destiny, and that the group will only lose value in future.

For that reason, we value the group at a relatively low EBITDA multiple (see valuation). Whoever acquires Van Pur is going to have to invest in operational integration, and turn the portfolio around with some successful premiumisation plays, if the EBITDA margin is to return to double-digits.

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THIS LEAD'S VALUATION
Size (€ mln) 130
Sector brewing
Asset Quality Poland no.4 economy
Seller individuals
Buyer private corporate
P/S 0,67
P/Ebitda 8,0
Type enterprise value
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