Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexCryptocurrenciesEconomic EventsPress releases

AB InBev pulls Budweiser listing, canceling year's largest IPO

share with twitter share with LinkedIn share with facebook
share via e-mail
0
07/12/2019 | 09:53pm 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

HONG KONG/NEW YORK/BRUSSELS (Reuters) - Anheuser-Busch InBev said on Friday it will not proceed with the planned listing in Hong Kong of its Asia Pacific unit, Budweiser Brewing Company APAC Ltd, in what would have been the world's biggest initial public offering (IPO) of 2019.

AB InBev, the world's largest brewer, was aiming to sell as much as $9.8 billion in Budweiser stock to seek relief from its heavy debt burden. AB InBev shares ended trading in New York down 3%, as investors saw that prospect slipping away.

The canceled IPO is also a setback to the Hong Kong stock exchange, which hoped Budweiser's listing would help attract other high-profile international companies at a time of increased trade tensions between the United States and China.

UK-based data center operator Global Switch and consumer lender Home Credit Group are among the international companies that have been eying Hong Kong IPOs.

AB InBev said the decision was due to "several factors, including the prevailing market conditions," despite the Hong Kong stock market being almost flat on Friday and trading close to its historic highs.

Sources close to the IPO said investors were unwilling to entertain AB InBev's expectations for the Budweiser APAC business to trade at a valuation multiple above that of peers.

Budweiser APAC, whose portfolio of more than 50 beer brands includes Stella Artois and Corona, was marketing its shares with an indicative range of HK$40-HK$47. While it received offers within that range from hedge funds and private wealth managers, some large long-only U.S. investors, which are often prioritized in an IPO, made offers below the HK$40 per share level, the sources said.

The indicative price range valued Budweiser at 15.5-18.2 times its enterprise value to its estimated 2020 cash flow, according to the sources. By comparison, AB InBev trades at 10.3 times its projected 12-month earnings, China-focused peer Tsingtao trades at 14.1 times, and Japan's Kirin, another Asia-centric brewing giant, trades at 9.9 times, according to Refinitiv data.

Unlike U.S. bourses, the Hong Kong stock exchange also restricts companies' ability to discount their IPOs. Limiting AB InBev's options was its decision not to take advantage of a provision that would have given it leeway to lower Budweiser's price range by 10%, as long as it flagged that as a risk in the IPO prospectus.

AB InBev had expected Budweiser's IPO to eclipse Uber Technologies as the biggest IPO of the year. It ended up being the third-largest listing ever to be withdrawn, after Sociedad Estatal Loterias y Apuestas del Estado in 2011 and AIA Group in early 2010, according to Dealogic.

"It was the right thing to do. I'm glad they didn't do this if the demand was soft," Liberum analyst Nico von Stackelberg said of AB InBev's decision.

AB InBev left the door open to revisit the IPO, saying it "will closely monitor market conditions."

HIGHLY LEVERAGED PARENT

The canceled IPO is also a blow to the investment banks leading it, JPMorgan Chase & Co and Morgan Stanley. Morgan Stanley in the first six months of 2019 earned more fees from Asia Pacific IPOs than any other U.S. or European bank, according to Refinitiv league table data, while JPMorgan was ranked 31st.

Budweiser APAC was seeking to raise between $8.3 billion and $9.8 billion through the float, much of which was to go toward paying down debt at its highly leveraged parent.

AB InBev has been working to reduce a debt pile of more than $100 billion that it built up with the purchase of nearest rival SABMiller in late 2016.

AB InBev cut its dividend for 2018. It has said it will reduce its net debt-to-EBITDA ratio to below 4.0 by the end of 2020 from 4.6 at the end of last year, saying it is not dependent on the Asian flotation. It puts the optimal ratio at 2.

The company had positioned its Hong Kong listing as creating a champion in Asia-Pacific, where sales are growing as increasingly wealthy consumers turn to premium beer brands.

The IPO was set to precede Alibaba's plans to raise as much as $20 billion through a Hong Kong listing.

Last month, logistics real estate developer ESR Cayman Ltd shelved its Hong Kong IPO of up to $1.24 billion "in light of the current market conditions."

(Reporting by Julie Zhu in Hong Kong, Joshua Franklin in New York and Philip Blenkinsop in BrusselsAdditional reporting by Jennifer Hughes in Hong Kong, Rachel Armstrong in London and Jessica DiNapoli in New York; editing by Louise Heavens, Susan Thomas, Leslie Adler and Cynthia Osterman)

By Julie Zhu, Joshua Franklin and Philip Blenkinsop

Stocks mentioned in the article
ChangeLast1st jan.
UBER TECHNOLOGIES INC 1.18% 43.69 Delayed Quote.0.00%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Economy & Forex"
09:16pNEWS HIGHLIGHTS : Top Company News of the Day
DJ
09:16pNEWS HIGHLIGHTS : Top Global Markets News of the Day
DJ
09:09pWILBUR ROSS : Trump Agrees to 'Timely' Licensing Decision for Huawei Sales -- 3rd Update
DJ
09:05pSouth Korea central bank says Japan's export curbs among top three economic risks
RE
09:04pHuawei's U.S. research arm slashes more than 70% of workforce
RE
08:48pWhite House and Congress Reach Agreement on Spending, Debt Ceiling -- Update
DJ
08:37pSterling on back foot due to growing concern about no-deal Brexit
RE
08:29pEasing hopes prop up global stocks, pound sags as Britain eyes new PM
RE
07:53pTrump agrees to prompt responses to license requests for Huawei sales
RE
07:40pARKANSAS FARM BUREAU : Top Young Farmers Recognized
PU
Latest news "Economy & Forex"
Advertisement