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Topvar set to sell shares

SOUTH African corporation SABMiller is ready to add another Slovak brewery to its shopping basket. In addition to Šariš, which it acquired in 1997, the group intends to buy a 95-percent stake in Topvar.

SOUTH African corporation SABMiller is ready to add another Slovak brewery to its shopping basket. In addition to Šariš, which it acquired in 1997, the group intends to buy a 95-percent stake in Topvar.

SABMiller said it had entered into agreements with Topvar over purchasing the strong local brand. If the deal goes through, SABMiller and another global brewery, Heineken, will control 85 percent of the Slovak beer market, squeezing Slovakia's independent beer brewers into the remaining 15 percent.

Lovers of Topvar should not worry about losing their favourite beer. Topvar Director Peter Vendelin told The Slovak Spectator that any contract would require SABMiller to keep the brand.

However, not everything will stay the same. "We plan to change the marketing and go national with Topvar. Currently, this brand is regional. We will use our existing distribution forum in Slovakia to expand Topvar nationally," said Nigel Fairbrass, speaking from SABMiller's marketing office in London.

Before the deal can go through, however, the Slovak Antitrust Office must approve. Antitrust office spokesperson Miroslav Jurkovič told The Slovak Spectator that he could not discuss the deal until his office received official notification of the SABMiller-Topvar merger.

Nevertheless, motivated by information published in the Slovak media, the antitrust office initiated preliminary research into the beer market to discover general trends and their influence on sales. During the course of its research, the Antitrust Office learned that Slovakia's independent brewers are nervous about the impending deal.

According to Fairbrass, SABMiller's ultimate goal is to acquire 95 percent of Topvar's shares. However, the process will be gradual.

First, SABMiller will buy 33 percent of Topvar from small shareholders that currently own 40.5 percent of the company. If any of those shareholders refuse to sell, the majority shareholder will make up the difference to equal 33 percent. Then it will sell SABMiller more shares to not exceed 49 percent of the company.

Six months later, SABMiller will expand its Topvar shares to 67 percent. The remaining shares will be sold within the following 18 months, securing SABMiller 95 percent of Topvar's shares over the course of two years.

While no one is willing to say how much the shares will cost SABMiller, employee shareholders believe that they will get between Sk350 to 1,000 (€8.80 to €25.14) per share.

Topvar was formed in 1994 as a joint-stock company owned by its employees. During the privatization, the nominal price of one share was Sk750. The managers of Topvar required 51 percent, employees bought 34 percent and the town of Topoľčany received 15 percent.

Currently, employees own 24.5 percent of the company. Former and current managers own a 59.5-percent stake. None of Topvar's shares are traded on the Bratislava stock market.

Over the last 10 years, Topvar developed a reputation for being a dynamic company. Topvar reached its peak in sales in 2003, managing to produce 679,000 hectolitres of beer. However, last year's sales dropped by almost 110,000 hectolitres due to "a steep increase in consumer taxation", according to the director of Slovakia's Brewery Association, Roman Šulák.

Šulák continued: "The tax has severely hit the beer market. Topvar wasn't dependent on these sales, however. The decision [to sell] was, in the given situation, the best one."

SABMiller plans to invest into marketing, branding and production capacity. At the moment, it does not plan to make management changes. "The current management team wants to continue their involvement in the business. Over time, we will look to ways to merge the operation with Šariš. But it is not likely to happen for at least another 18 months after we sign the deal," Fairbrass said.

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