Turkish Business Club

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  • Rabia Rahimbayeva
    Rabia Rahimbayeva    Group moderator   Ambassador
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    Efes Beer Wants to Remain Independent
    Anadolu Efes, Türkiye’s dominant beverages company, said it spurned approaches from some of the world’s biggest beer makers amid speculation that the brewer may become a takeover target.

    Istanbul-based Efes, one of the world’s largest independent brewers, has received approaches for all its beer operations, and separately for its Russian division, Alejandro Jimenez, president of Efes Beer Group, said in an interview.

    “You would expect all the big players to look at us, but frankly we are not ready for that -- that’s what we’re telling them,” Jimenez said in the company’s Istanbul headquarters. “It is not an issue of whether we have to do it or not, it is an issue of whether we want to. We want to remain independent.”

    SABMiller is among brewers that may seek to buy part or all of the company to enter the growing Turkish market or expand in Russia, analysts at UBS AG and Credit Suisse Group AG say. Efes, which accounts for about 10 percent of total beer sales in Russia, has a market value of 7.2 billion Turkish lira ($4.8 billion). The brewer is 56 percent-owned by the Özilhan and Yazıcı families, which founded the company in the 1950s.

    “Efes are attractive for all the reasons that they are not for sale -- their market position in Türkiye is cracking and anybody would love to have it,” said Andrew Holland, an analyst at Evolution Securities in London. “They could sell off either the international or Turkish businesses, but I cannot see any obvious pressure on them to do either.”

    RUSSİA TO KAZAKHSTAN

    SABMiller spokesman Jonathan Oates declined to comment on whether the company has approached Efes. SABMiller has targeted emerging markets from eastern Europe to Latin America for acquisitions, and generates about 85 percent of earnings from the developing world -- the most among the top four brewers.

    Efes began brewing in 1969 and now controls about 87 percent of the Turkish beer market. The company owns 74 percent of Efes Breweries International NV, which spans markets from Russia to Kazakhstan and Georgia.

    While Efes would “never say never” to a merger with a larger competitor, expansion in Central Asia and Russia is at the top of the Turkish brewer’s priority list, said Costa Rican- born Jimenez, who has led the beer unit for three years.


    In Russia, the maker of Efes Pilsen is considering either buying or building one more brewery to expand in the Siberian region and add to its five existing facilities, Jimenez said. The company would also consider buying a larger competitor in the country should President Dmitry Medvedev’s campaign to increase alcohol taxes and restrict availability of beer prompt some companies to exit the market, he said.

    ‘Vital part’

    “Russia is a vital part of our operations and we want to grow more than we can do organically,” according to Jimenez, who splits his time mostly between Moscow and Istanbul. “We would look at other significant players that might get tired of Russia because of the market conditions.”

    Speculation that Efes may enter a profit-sharing joint venture in the country is “premature,” Jimenez said in the Feb. 12 interview. A similar venture with Heineken NV in Serbia and Kazakhstan does not prevent the company teaming up with a different partner in Russia, he said.

    After the acquisition of Fomento Economico Mexicano SAB’s beer unit by Heineken last month, Efes is the world’s twelfth- largest brewer, according to data supplied by Plato Logic. The company’s shares rose 63 percent last year, less than the MSCI Türkiye Index’s 86 percent gain.

    Aside from expanding in Russia, Efes’ beer unit wants to enter central Asian markets including Azerbaijan, Kyrgyzstan and Uzbekistan, Jimenez said. The brewer is increasing exports to former Soviet countries such as Ukraine and Belarus before considering building its own breweries there.

    “Central Asia is an attractive market for us, and it has to be done through acquisitions because you need the local brands to generate the mass volumes you need,” Jimenez said. With net debt being less than 1.5 times earnings, Efes is “not averse to borrowing money” to fund expansion, the executive said. “If there is an opportunity that required a big amount of money then we have the capacity,” he added.

    The brewer is “very focused” on buying the 26 percent of Efes International it does not own after the unit’s minority shareholders rejected an offer in August, though there are no plans at present to make a new bid, Jimenez said. The August offer would have cost Efes about $150 million, he estimated.

    Source: Bloomberg
    • 17 Feb 2010, 10:55 pm