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MarketScreener Homepage  >  Equities  >  Tokyo  >  Kirin Holdings Co Ltd    2503   JP3258000003


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AB InBev sells Australian brewer to Asahi, keeps Asia IPO on radar

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07/19/2019 | 08:16am EDT
FILE PHOTO: Portfolio beer brands of Budweiser Brewing Company APAC Ltd are displayed during a news conference on the company's IPO in Hong Kong

BRUSSELS/LONDON (Reuters) - Anheuser-Busch InBev, the world's largest brewer, is selling its Australian operations to Japan's Asahi for $11 billion and could revive the stalled flotation of its Asian business as it looks to cut debt.

The Belgium-based brewer, weighed down with debt after its 2016 acquisition of rival SABMiller, said on Friday it had agreed to sell Australian subsidiary Carlton & United Breweries (CUB) at an enterprise value of A$16 billion (£9.01 billion).

For Asahi, the deal is its biggest ever and, according to a source close to the negotiations, will turn the Japanese firm into the world's third biggest brewer after AB InBev and Heineken.

The transaction comes only a week after AB InBev shelved an initial public offering (IPO) to sell a 15% stake in its Asian operations, including Australia, citing factors including unfavourable market conditions.

The source said Asahi had expressed interest in buying the Australian unit earlier this year but discussions only took off after the IPO plan collapsed.

"AB InBev was quick in re-engaging with Asahi as they could raise pretty much the same amount of cash they were aiming for with the IPO," the source said, adding talks took place in Hong Kong and London.

What would have been the world's largest flotation this year, raising up to $9.8 billion for AB InBev, ended up being the third-largest ever to be withdrawn. Sources close to the matter said investors had baulked at the price.

AB InBev said on Friday it still believed in the rationale of offering a minority stake of Asian business Budweiser APAC, now excluding Australia, provided it could be completed at "the right valuation".

The brewer, which had billed the IPO as a means to drive regional consolidation, said the Australia sale would help it to accelerate expansion into other fast-growing markets in the region and globally.

Without Australia, a large but mature market, AB InBev's Asia-Pacific operations would be more skewed towards faster-growth markets such as China, where AB InBev sells more Budweiser than in the United States.

With the inclusion of Vietnam and India, too, the IPO could prove more attractive than before.

Bernstein Securities analyst Trevor Stirling said the Australia business was a profitable cash cow, but an IPO without it could yield a higher valuation.

However, a question mark would remain over AB InBev's more mature South Korean business, given that it had bought it back from private equity group KKR in 2014.


The bulk of the proceeds from the Australia deal will be used to reduce debt, AB InBev said, with the deal expected to close in the first quarter of 2020.

AB InBev shares were up 4.6% at 1140 GMT, among the strongest performers on the FTSEurofirst 300 index <.FTEU3> as the stock more than recovered ground lost last week.

The brewer's net debt totalled $102.5 billion at the end of 2018 and its net debt to core profit (EBITDA) ratio was at 4.6 times. It has pledged to reduce that to less than four times EBITDA by the end of 2020 and has a long-term target of two times EBITDA.

Asahi, which previously paid 9.85 billion euros to buy AB InBev's eastern Europe business as well as the Grolsch and Peroni brands, already sells its Asahi Super Dry lager in Australia along with Schweppes.

It will also gain leading Australian beer Victoria Bitter (VB), placing Asahi in more direct competition there with Japanese rival Kirin s, which produces the XXXX Gold brand through its Lion subsidiary.

Asahi said the deal would be debt-free and it would issue up to 200 billion yen ($1.9 billion) of shares to fund it.

Rothschild and Nomura advised Asahi along with law firm Allen & Overy. Lazard and Freshfields Bruckhaus Deringer worked with AB InBev.

The Japanese brewer, which has been seeking overseas deals to compensate for slow growth, said net debt would temporarily exceed four times EBITDA, with its debt to equity and capitalisation ratios also expected to worsen.

AB InBev said the enterprise value of the deal represented a multiple of 14.9 times EBITDA. The pricing of its shelved IPO had applied a multiple of 16-18 times for the Asian business.

Jefferies analysts said the Australia multiple was attractive for AB InBev and would cut its net debt this year to $87 billion with a net debt to EBITDA ratio of 3.9, achieving its target a year early.

(Reporting by Philip Blenkinsop and Pamela Barbaglia; Additional reporting by Risuko Ando in Tokyo, Byron Kaye in Sydney and Miyoung Kim in Singapore; Editing by David Goodman and Mark Potter)

By Philip Blenkinsop and Pamela Barbaglia

Stocks mentioned in the article
ChangeLast1st jan.
ANHEUSER-BUSCH INBEV -0.57% 86.15 Delayed Quote.49.31%
ASAHI GROUP HOLDINGS LTD -0.18% 4903 End-of-day quote.16.77%
HEINEKEN -1.16% 95.2 Delayed Quote.23.32%
KIRIN HOLDINGS CO LTD -0.02% 2114.5 End-of-day quote.-6.17%
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Financials (JPY)
Sales 2019 1 960 B
EBIT 2019 109 B
Net income 2019 70 945 M
Debt 2019 368 B
Yield 2019 3,01%
P/E ratio 2019 30,6x
P/E ratio 2020 13,2x
EV / Sales2019 1,13x
EV / Sales2020 1,09x
Capitalization 1 857 B
Duration : Period :
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Technical analysis trends KIRIN HOLDINGS CO LTD
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Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 2 632,00  JPY
Last Close Price 2 114,50  JPY
Spread / Highest target 56,1%
Spread / Average Target 24,5%
Spread / Lowest Target 8,77%
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Yoshinori Isozaki President, CEO & Representative Director
Noriya Yokota Chief Financial Officer & Director
Toshio Arima Independent Outside Director
Keisuke Nishimura Representative Director & Vice President
Toshiya Miyoshi Director & Managing Executive Officer
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1st jan.Capitalization (M$)
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