LONDON/BRUSSELS - Anheuser-Busch InBev's central European assets are not top of its for-sale list, not on the must-buy charts of rivals, and will need some sweetening to secure a deal with a private equity suitor.
The world's largest brewer is testing the appetite of buyers for 11 breweries spread from the Czech Republic to Bulgaria, and may hold out for at least $2 billion.
Five private equity companies have expressed interest, sources have told Reuters -- Cinven,Warburg Pincus CVC Capital Partners, TPG and KKR.
But their interest may have been whetted more by the prospect of a favourably constructed deal than any thirst for beer.
KKR stepped into brewing by agreeing to buy ABInBev's Korea unit Oriental Brewery last month, but that was a single business and one it might sell back to the Belgian brewer, which has a right to retrieve it in five years at set but undisclosed terms.
The group of bidders, a respectable interest but hardly a stampede, might need some reassurance about a resale and some vendor financing to push the deal through.
That's the only reason I can think that private equity guys would look at ABInBev CEE today, said a private equity manager.
Terms of the Korea buyback clause are not known and could range from an offer of fair market value to a more detailed deal giving KKR a defined return on its investment.
That ABInBev may not want or be able to buy back the business is the risk the buyer must be prepared to bear.
Brewing rivals certainly appear uninterested at the moment.
Heineken and Carlsberg are still paying off their 7.8 billion pound ($12.79 billion) purchase of Scottish & Newcastle last year.
SABMiller has greater resources, but could face anti-trust challenges in a country such as the Czech Republic, where it already has 48 percent of the market. A reason for ABInBev selling the assets, that they are small and disparate, may be a further reason for SABMiller to stay away.
SAB wants to keep its powder dry to do something big and may not want to buy up these little chickens. For them, Russia is what would make sense, one London-based analyst said.
ABInBev is expected to hang on to its larger Russian and Ukrainian breweries.
Any private equity buyer must hope to entice brewers in later years, when the market and their finances are healthier.
NO FIRE SALE
ABInBev, brewer of Budweiser, Stella and Beck's, has said it wants $7 billion from divestments to repay $45 billion of loans for InBev's $52 billion takeover last year of U.S. brewer Anheuser-Busch.
It is still a further $4 billion short, but it no longer needs to hit the sell-off target by November as originally planned after some $13.6 billion of refinancing since the start of the year.
Top of its list of likely disposals, according to analysts, were the Korean business, divested U.S Labatt distributor and the still unsold U.S. theme parks and U.S. packaging operation.
A minority in Tsingtao dispatched in two stages for $902 million, was hardly core. But few observers expected central Europe and key brand Staropramen to go under the hammer.
I think they would prefer not to be doing this, a London-based brewing analyst said.
A case can nevertheless be made for it being sold.
The seven countries -- Bulgaria, Croatia, Czech Republic, Hungary, Serbia, Montenegro and Romania -- produce 15 million hectolitres per year, just 3 percent of ABInBev's global output.
The individual businesses are relatively small, face reasonably strong competition and the company has already gone through them with its fine cost-cutting comb.
But bankers and brewing analysts say ABInBev could abort the exercise as it appeared to do for Germany earlier this year when few bidders bit.
Germany has gone quiet ... A sale here is certainly a possibility, but no means a dead cert, said Trevor Stirling, brewing analyst at Sanford Bernstein.
(Additional reporting by Victoria Howley and David Jones; Editing by Rupert Winchester)