AB InBev to sell Australian unit to Asahi in $11bn deal

Anheuser-Busch InBev has agreed to sell its Australian operations to Japan’s Asahi for an enterprise value of $11.3bn, as the world’s largest brewer moves to raise cash a week after an aborted initial public offering.

The sale of Carlton & United Breweries will help AB InBev chip away at its $106bn debt mountain, and marks Asahi’s biggest overseas acquisition.

The Belgian-listed brewer last week abandoned a plan to list its Asian business after investors balked at the mooted valuation of $54.2bn-$63.7bn. 

Shares in AB InBev rose 6 per cent in afternoon trading on Friday, while Asahi closed up 1.5 per cent in Tokyo before the deal was announced.

The acquisition marks Asahi’s biggest move as it pursues growth outside its shrinking home market. It is the third time the Japanese group has scooped up assets from AB InBev, having spent €9.9bn on brands including Pilsner Urquell, Peroni and Grolsch. 

Asahi said the deal would increase its net debt to above four times earnings before interest, tax, depreciation and amortisation, and that it would issue up to $1.9bn in new equity to finance the acquisition. 

The sale includes Australian brands Carlton and Great Northern Brewing Company, as well as the rights to sell AB InBev’s global brands such as Budweiser in the country.

AB InBev was able to move quickly because Asahi had made an earlier offer for the Australian business, which had been rebuffed as the Belgian brewer pursued the IPO, according to one person close to the deal. Once the listing failed, AB InBev contacted Asahi almost immediately. 

Asahi, which is known for its Super Dry brand, is building its presence in Australia, where it has done five deals in the non-alcoholic segment since 2009 © Bloomberg

Although it pulled the IPO only last week, AB InBev signalled it could return to the idea, “provided that it can be completed at the right valuation”. 

The disposal of the Australian business hives off a mature, highly profitable part of AB InBev’s Asian operation, so any renewed attempt at an IPO would be likely to include only the higher-growth countries of China, India and Vietnam. 

“The divestiture of CUB, once completed, will help AB InBev to accelerate its expansion into other fast-growing markets in the [Asia-Pacific] region and globally,” the company said.

AB InBev said the deal price represented a valuation of 14.9 times ebitda, which analysts on Friday greeted as a favourable multiple. AB InBev trades at 12.5 times ebitda, similar to smaller rival Heineken and slightly ahead of Carlsberg at 11 times, according to S&P Capital IQ data.

AB InBev is heavily indebted after splashing out £79bn to buy rival SABMiller in 2016. Its net debt stood at 4.6 times ebitda at the end of 2018, a multiple it aims to cut to 4 by the end of next year.

“This deal puts the Asia IPO mis-step to bed with the company both deleveraging and getting a rich multiple for a developed market business,” said Ed Mundy, analyst at Jefferies.

The deal would help Asahi, known for its Super Dry beer brand, build its presence in Australia, where it has already done five deals in the non-alcoholic segment since 2009. 

Compared with Asahi’s earlier purchase of European assets, Bernstein analyst Euan McLeish said CUB would have a stronger market position, higher margins and more synergy with the Japanese brewer’s existing operations in Australia. 

“It’s an attractive asset,” Mr McLeish said. However, he added: “I think it will take other deals off the cards for a couple of years.” 

The transaction is expected to close by the first quarter of next year. Rothschild and Nomura advised Asahi on the acquisition, while Lazard advised AB InBev.

Source link Finance News Australia

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