Budweiser Brewer Explores Asset Sales After Calling Off Asia IPO -- Update
July 18 2019 - 8:33PM
Dow Jones News
By Jennifer Maloney and Saabira Chaudhuri
Anheuser-Busch InBev SA is considering selling off business
units in South Korea, Australia and Central America to cut its
massive debt pile as it pursues a backup plan after calling off the
listing of its Asian business, according to people familiar with
the matter.
The Korean and Australian businesses, which make popular beers
such as Cass and Victoria Bitter, were major parts of the canceled
Asian initial public offering. The brewer now hopes to raise at
least $10 billion from asset sales, the people said.
Private-equity firm KKR & Co. approached AB InBev in May
about buying some of the Asian assets, some of the people said. KKR
previously bought the Korean business and sold it back to AB InBev
in 2014 for $5.8 billion. Also in May, Japanese brewer Asahi Group
Holdings Ltd. expressed interest in buying the Australia business,
one person said.
AB InBev, which makes one out of every four beers sold
world-wide, owns hundreds of brands in dozens of countries after a
global buying spree that gave it Budweiser, Stella Artois and
Corona. But the deal making also saddled the company with more than
$100 billion in debt at a time when global beer sales are
slowing.
AB InBev last week canceled the planned IPO of its Asian
business, in which it aimed to raise nearly $10 billion, citing
market conditions, scrapping what would have been the largest IPO
of the year. The primary aim of the listing was to reduce the
company's debt load.
Ultimately, the company hopes to get its debt down to about $80
billion, one of the people said. That would be a level at which the
company could continue to pursue acquisitions and make capital
investments and wouldn't risk being downgraded below investment
grade by credit-rating firms, the person said.
Another option on the table is again cutting AB InBev's
dividend, which was halved last fall, but some board members are
reluctant to do this, the people familiar with the matter said. The
company currently pays about $4 billion in annual dividends.
The business units under consideration for a sale -- in South
Korea, Australia, Guatemala and Honduras -- are attractive to
buyers because they have high market share and generate cash. At
the same time, they aren't high-growth markets, so selling them
wouldn't hurt AB InBev's growth prospects, the person said.
South Korea and Australia were part of a unit, which included
Japan, that generated about $3.3 billion in revenue in 2018,
according to the IPO documents. The Australia business includes
local rights to the Foster's brand, which is owned outside
Australia by Heineken NV and Molson Coors Brewing Co.
AB InBev considered selling one or more of these assets as an
alternative to the IPO but chose to pursue the listing first, the
people familiar with the matter said. The Australian, a national
newspaper, earlier reported that Asahi had expressed interest in
the Australian business.
The company's U.S.-listed shares closed about 1% higher Thursday
at $89.34.
The world's largest brewer has struggled to cut into its debt as
it confronts challenging emerging markets and declining beer
consumption in key regions. In the U.S., its biggest market, AB
InBev's flagship Budweiser and Bud Light brands have lost share to
rivals as consumers abandon American lagers for wine, spirits,
craft beers and Mexican imports.
The IPO would have allowed AB InBev to reach its 2020 debt ratio
target a year ahead of schedule, according to Guggenheim analyst
Laurent Grandet.
--Miriam Gottfried contributed to this article.
Write to Jennifer Maloney at jennifer.maloney@wsj.com and
Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
July 18, 2019 20:18 ET (00:18 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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