There’s more news in the Budvar privatization saga: the Czech government’s tender for an adviser is now complete, with the contract going to the Prague law firm of Kříž & Bělina, as the Prague Daily Monitor reported yesterday, via Hospodářské noviny (subscription required). Kříž & Bělina will help the Czech government take the initial step toward privatization, that of turning Budvar into a joint-stock company.
Though the path forward remains unclear, we now know four of the parties stumbling down it: the Czech government, Budvar, Kříž & Bělina and, inevitably, Anheuser-Busch, described in the article as “considered the most serious bidder in the privatisation.” The article also takes a stab in the dark at Budvar’s worth, suggesting 1 billion dollars or perhaps even 1 billion euros.
Why so much? Well, it’s not what Budvar sells, currently just 1.25 million hectoliters of high-grade lager per year. It’s what Budvar’s regional rights to the name Budweiser might keep Anheuser-Busch from selling.
Some back-of-the-beermat math: if you figured, very optimistically, that Budvar could generate a profit of $.30 on every half-liter — which only wholesale for about $1 on the local market anyway — that would only come out to about $37 million annually. The latest figure I could find was for 2006, when Budvar earned 267.2 million Kč, or about $15.7 million at today’s rates. There are many ways to calculate the sale price of a company, but as far as I know, very few of them suggest multiplying a company’s annual take by a hundred.
However, once you factor in all of those countries around the world where Budvar has the right to use the name Budweiser, then throw in all the money that Anheuser-Busch has spent on billable hours, you end up with a very large number. I personally can’t count that high, so I’ll shrug and say $1 billion. Sure.
More details from the report:
• Kříž & Bělina are getting 12.5 million CZK (about $777,000) for the job of helping convert Budvar to a joint-stock company.
• Another tender, later, will choose another adviser for the actual sale of Budvar.
• Prague Airport and Czech Airlines should both be privatized before Budvar.
• Again, Czech Agriculture Minister Petr Gandalovič says that Budvar should not be privatized before the end of 2008.
People who know people who know things have just passed the message that the price for Budvar won’t have anything to do with Budvar’s annual sales, cash flow or profits, and it won’t have anything to do with the brewery itself in České Budějovice. It is only about the brand — period. I’ve been told that I should make it clear that the brand in question is, of course, Budweiser.
Sometimes when anonymous tips come through they sign off in ominous ways. Like this: “The Budvar trademark isn’t worth jack.”