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Asahi headquarters in Tokyo
08 April 2020

Australian watchdog clears Asahi’s takeover of CUB

Australia | What has taken the competition authority ACCC so long? More than eight months after the deal’s announcement, the ACCC gave Asahi the go-ahead to take over the country’s leading brewer CUB from AB-InBev.

The ruling was announced on 1 April 2020 (no joke).

Asahi’s proposed USD 11.3 billion acquisition of Carlton & United Breweries (CUB) will not be opposed, after Asahi has agreed to divest two of its beer brands and three of its cider brands.

The brands to be sold are the Strongbow, Bonamy’s and Little Green cider brands and the Stella Artois and Beck’s beer brands. The future buyer or buyers of these assets will need to be approved by the ACCC.

Without the sale of the three cider brands, the combined Asahi-CUB company would have accounted for two thirds of cider sales in Australia. Asahi would have owned the two largest cider brands, Somersby and Strongbow.

Competition concerns alleviated

“We determined that Asahi selling the beer and cider brands would be sufficient to address our competition concerns and provide an opportunity for another business to play an important role in a relatively concentrated industry,” the ACCC said.

Although Asahi supplies a relatively small share of beer sales in Australia – about 1 percent –, the ACCC was concerned the proposed acquisition would remove a rival capable of competing strongly with the two largest brewers, CUB and Lion.

In the meantime, Asahi will set up a separate division to oversee the sale of the five brands.

Asahi’s beer brands include Asahi Super Dry, Peroni, Mountain Goat, Cricketers Arms and Two Suns. It also owns the Schweppes soft drinks business in Australia.

CUB owns mainstream beer brands Victoria Bitter, Carlton Draught and Great Northern, and craft brewers 4 Pines (Sydney), Pirate Life (Adelaide) and Balter (near Brisbane). It also makes Crown Lager and Pure Blonde and currently holds close to 49 percent of the AUD 14 billion (USD 8.4 billion) beer market, says the Australian Financial Review newspaper.

Next step in the approval process

The deal still requires the approval of the Foreign Investment Review Board (FIRB), and the ACCC needs to ratify any future buyer of the brands being sold off.

The website brewsnews.com.au reports that it remains unclear when the FIRB will be able to consider the case, following an announcement in March that it will now take up to six months – compared to 30 days previously – to assess each deal.

The government explained that measures have been put in place to “safeguard the national interest as the coronavirus outbreak puts intense pressure on the Australian economy and Australian businesses.”

The government did say it would prioritise applications for investments that protect and support Australian businesses as well as Australian jobs.

What a convoluted process.

Read more about the Asahi-CUB transaction: Questions over Asahi-CUB transaction. How do the Australian Craft Brewers react?