Asahi offers to divest cider, beer brands to seal CUB takeover

The ACCC will consider Asahi’s offer to sell cider and beer brands as it tries to win approval for its $16bn CUB takeover.

Carlton and United Breweries (CUB) CEO Peter Filipovic. Picture: Aaron Francis

The competition regulator will consider divestment proposals offered by brewing giant Asahi to get its $16 billion takeover of the nation’s largest beer group, Carlton & United Breweries, over the line.

Asahi has proposed selling off key cider brands Strongbow, Bonamy’s and Little Green, as well as ridding itself locally of beer brands Stella and Beck’s.

The Australian Competition and Consumer Commission said it is seeking views on the divestment undertaking offered by Asahi in relation to its proposed acquisition of CUB.

In July last year Asahi reached a deal with Anheuser-Busch InBev to acquire Carlton & United Breweries for $16 billion.

Asahi’s proposed undertaking seeks to address the competition concerns identified by the ACCC in its statement of issues in December 2019, which raised preliminary competition concerns in relation to cider and beer markets and the huge market power Asahi would have if it gained control of CUB.

The proposed divestment undertaking would require Asahi to divest the cider and beer brands to purchasers approved by the ACCC.

“The release of the proposed divestment undertaking for public comment should not be interpreted as a signal that the ACCC will ultimately accept the undertaking and clear the transaction, “ ACCC chairman Rod Sims said. “We are following our usual practice of publicly consulting on a proposed divestment package.

“We are seeking feedback from industry participants on whether the divestment package will be sufficient to address the competition concerns.”

In December 2019 the ACCC detailed how the acquisition would result in significant consolidation of cider brands. The ACCC considers that Asahi and CUB’s cider brands compete closely with each other.

Strongbow cider.

In relation to beer, the ACCC noted that Asahi, while having a low market share, appears to be a vigorous competitor to the two major beer suppliers, and this competition will be removed if the acquisition proceeds.

Asahi said it welcomes the ACCC announcement.

It said Asahi has been working closely with the watchdog and had proposed undertakings to address the preliminary concerns raised by the ACCC.

The cider brands Asahi could sell - Strongbow, Little Green and Bonamy’s - equate to about 20 per cent of the Australian cider market, with Strongbow being about 18 per cent.

Asahi believes beer brands Stella Artois and Beck’s are established premium international beer brands that would attract strong interest from buyers.

Asahi Beverages chairman Peter Margin said: “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.”

He said Asahi was working towards completing the deal as soon as possible, once it had got the tick from both the ACCC and the Foreign Investment Review Board.

“If the ACCC approves the deal, Asahi Beverages will undertake a process to find a suitable buyer for the abovementioned brands.”

The ACCC now seeks views from market participants on whether the proposed undertaking would be likely to alleviate its competition concerns. Parties wishing to make a submission should do so by March 18.