Carlyle said to have a taste for cider as Asahi brand sale begins

Picture: AFP

Global private equity fund The Carlyle Group is expected to be among the initial line-up of potential buyers looking at the alcoholic drinks brands that have been put up for sale by Japanese brewing giant Asahi.

It is thought Carlyle will pursue the business through its local wine company Accolade Wines. Carlyle purchased Accolade in 2018 for about $1bn from CPE Capital (then known as Champ Private Equity).

CPE created Accolade in early 2011 after buying two wine divisions from Constellation Brands for $290m, and the business has historically generated half of its sales from Europe and Britain.

Another private equity firm that is expected to take a look at the assets on offer is Pacific Equity Partners.

Some also believe KKR may look at the assets through its Australian pub business, The Australian Venue Company. Since KKR gained control of TAVC in 2017 it is known to have an appetite to increase scale.

The private equity firm has been looking at a range of assets for the business, including pubs, liquor brands, licences and even retail liquor operations.

An initial public offering of the business was earmarked for this year, but plans were suspended due to the COVID-19 outbreak.

However, others are doubtful whether KKR will be in the mix, saying customers for the drinks would be unwilling to purchase stock from a competitor.

The sale of the drinks brands comes after Asahi agreed to buy Carlton United Breweries last year in a transaction worth about $16bn. The CUB deal triggered concerns by the Australian Competition & Consumer Commission in December relating to cider and beer markets and the market power it would gain following the deal.

The Japanese giant has since proposed to the ACCC to sell off brands to gain official clearance for the transaction. It is also selling the cider brands that are owned by CUB, which is a dominant player in the category.

The brands on offer equate to about 20 per cent of the Australian cider market, with Strongbow being about 18 per cent. Brands up for sale also include Bonamy’s and Little Green, as well as the licences to beer brands Stella and Beck’s.

Some believe it is surprising that Asahi has continued to follow through with the CUB deal following the COVID-19 disruptions, saying it may have been able to renegotiate an acquisition at a lower price.

Rothschild is advising on the transaction, and the sale process is due to get under way this month. Before it formally started, the Japanese giant was understood to have received a number of approaches for various parts of its portfolio.

The cider brands are expected to be the most attractive to prospective buyers.

Asahi has obtained Foreign Investment Review Board approval for the CUB transaction to proceed but is still waiting on a green light from the ACCC.