Business / Corporate

AB InBev keeps Asia IPO hopes alive as Asahi buys Australian unit

Bloomberg

Anheuser-Busch InBev NV said in a statement Friday it had agreed to sell its Australian operations to Asahi Group Holdings Ltd. for an enterprise value of 16 billion Australian dollars (¥1.2 trillion), and that it is still considering reviving an initial public offering for its Asian subsidiary.

The sale to Tokyo-based Asahi is expected to conclude by the first quarter of 2020, the statement issued by the Belgian company said. Carlton & United Breweries, whose brands include Foster’s and Victoria Bitter, accounts for almost half the beer market in Australia. AB InBev shares rose as much as 4.1 percent.

The deal gives Asahi a major foothold in Australia, furthering its strategy to build a global presence. It also represents a major shift in AB InBev’s position in Asia. Last week the company pulled a planned IPO of its regional operations that had aimed to raise as much as 9.8 billion U.S. dollars (¥1.06 trillion). Proceeds were to be used to reduce the company’s $100 billion-plus in borrowings.

AB InBev said Friday that the IPO of Budweiser Brewing Co. APAC would still be strategic provided it could achieve the right valuation. The proceeds from the Australian sale will go to reducing debt, the brewer added. The sale values Carlton & United at 14.9 times adjusted 2018 earnings before interest, taxes, depreciation and amortization, AB InBev said. “Selling down slower growth assets like Australia should make the APAC IPO much more interesting to investors given the reduced mix of slower growth, mature-market beer assets,” wrote Nico von Stackelberg, an analyst at Liberum.

Asahi has rapidly expanded overseas in recent years, trying to build its flagship Super Dry beer into a global premium beer alongside the likes of Heineken NV as its domestic beer market languishes with 14 straight years of beer shipment declines. In January, Asahi announced it would pay $330 million to buy the brewing business of Fuller, Smith & Turner PLC in the U.K. In 2016, it bought Peroni, Grolsch and Pilsner Urquell lagers from Anheuser-Busch and SAB Miller in two separate deals worth around $11 billion.

The deal will give Asahi a major boost in Australia. It is already the company’s second-largest overseas market behind Europe. But its presence there has been overshadowed by Carlton & United and Kirin Holdings Co.’s Lion, which combined account for 90 percent of the market, according to market research firm IBISWorld.

AB InBev acquired Carlton & United through the $106 billion purchase of SABMiller. The Budweiser-maker still has a major presence in Asia, particularly in China, though it’s facing challenges there amid shifting trends. Younger consumers are moving away from traditional beers toward higher-priced craft brews and cocktails, while competition is spiking after rival Heineken forged a blockbuster deal with a state-owned company.