Finally Cobra Beer's UK operations have been sold off to Molson Coors, the American brewer behind the Carling and Worthington brands, which will pick up 50.1% stake in a new joint venture. This will help the debt-laden brewer to resurrect itself in the UK market where it's a market leading beer seller among the South Asian population. Cobra in November appointed Rothschild to find a buyer for its business.
The deal does not involve Cobra's Indian operations which will continue to be controlled and managed by Karan Billimoria and his family. Reports suggest Billimoria is in talks with private equity funds to infuse capital into the Indian operations, where it sells 2 million cases brewed from nine locations. The company's talks with Wilbur Ross to raise capital for its India unit is believed to have hit a wall, and the company is said to be exploring alternative financing options, according to a report last week in The Times, the London based newspaper.
In the UK, Cobra Beer has signed an agreement to establish a joint venture company, Cobra Beer Partnership Ltd, with Molson Coors, which will own, produce and market the Cobra Beer brand. The JV acquired the brand and certain assets of the Cobra business from Cobra's Administrators, PwC.
The financial details of the deal are not known. Lord Karan Bilimoria, Founder and Chairman of Cobra Beer, was reportedly expecting £180 million to £200 million for the business, but that was hard to come by as the business was caught in a bind of low demand for beer in British market and the mounting losses. Billimoria owned 64% in the company, while Och-Ziff, the investment firm, also owned a stake in Cobra.
According to the sale memorandum, the company reported underlying 2008 losses of £15.9 million and is forecasting losses for the next three years, Times reported. The company had a topline focus rather than bottomline. Its net sales were forecast to rise from £34.1 million last year to £73.6 million in 2011. The group also claimed it spent about £40 million on marketing the brand since its launch in 1990.
India Hived Off
Billimoria said: "As a result of our Joint Venture with Molson Coors our Indian operations will now be wholly independent." It will be wholly owned and financed by its shareholders. Cobra set up shop in India in 2002.
Ravi Kaza, Managing Director of Cobra Beer India, said: "Clearly this is an exciting time for Cobra Beer in India as Cobra is well positioned as the first Indian international quality beer in the fastest growing beer market in the world. We are looking forward to taking Cobra Beer to the next level of its development in India."