The Australian reports that Japan's Asahi is on the verge of finalising a deal with Anheuser-Busch InBev - the brewer of U.S. beer giant Budweiser - to buy Carlton & United Breweries (CUB) for $16 billion. But those deals saddled the Belgian brewer with about $100 billion in debt; meanwhile, beer sales have slowed in the US and other major markets.
AB InBev attempted to raise up to $9.8 billion through an IPO of the business but abruptly cancelled the deal on July 12 due to several factors, including market conditions. The company had hoped the stock offering would raise almost $10 billion, enabling a substantial reduction of debt. The firm ranks coverage of public companies on a scale of negative five to five, with scores closest to five being the most favorable.
Carlton & United Breweries, whose brands include Foster's and Victoria Bitter, accounts for nearly half the beer market in Australia.
Shares of BUD stock opened at $89.34 on Friday. In response, it has snapped up craft brewers, launched limited-editions of Bud and new flavors for Bud Light, and put more marketing muscle behind its low-carb brew Michelob Ultra. Enterprise Financial Services Corp grew its holdings in shares of Anheuser Busch Inbev by 135.7% during the first quarter.
Carlos Brito, chief executive of AB InBev, said: "We continue to see great potential for our business in APAC and the region remains a growth engine within our company". It is already the company's second-largest overseas market behind Europe. Weaker currencies have reduced the value of sales in some emerging markets when converted into dollars.
AB InBev said it still believes in the rationale of a potential offering of a minority stake of Asian business Budweiser APAC, excluding Australia, provided it could be completed at "the right valuation".
Australia accounts for an estimated 27% of AB InBev's profit in Asia, according to brokerage Sanford C. Bernstein.
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This sale could also help AB InBev better position itself for any future share offering of its remaining Asia-pacific business.
AB InBev said the bulk of the proceeds from the deal, expected to close in the first quarter of 2020, would be used to reduce debt.
AB InBev employs around 175,00 people and generated US$54.6 billion in revenue in 2018.
Media coverage about Anheuser Busch Inbev (NYSE:BUD) has been trending positive on Friday, according to InfoTrie.
The Wall Street Journal reported Thursday that AB InBev, following the IPO's cancellation, was considering selling other assets, including its businesses in Australia, South Korea, Guatemala and Honduras.
AB InBev said Friday that the IPO of Budweiser Brewing Co. The divestiture was part of A-B InBev's effort to receive approval from the European Commission for the MegaBrew merger with SABMiller. Japan's beer market has been in decline since the early 2000s, according to Jefferies, and Japanese brewers have shown a willingness to pay high prices to secure a foothold in worldwide markets. The Tokyo-based company announced a $327 million deal to acquire the beer and cider business of London-based Fuller Smith & Turner in January.