Anheuser-Busch InBev to Sell Australian Business to Asahi Group Holdings for $11.3 Billion

A week after pulling back from a planned IPO of its Asia-Pacific operations, Anheuser-Busch InBev announced today an $11.3 billion deal to sell its Australian subsidiary, Carlton & United Breweries, to Asahi Group Holdings.

The transaction, pending regulatory approval, is expected to close by the first quarter of 2020. According to A-B InBev, the value of the deal reflects an implied multiple of 14.9 times EBITDA.

A-B’s decision to divest itself of Carlton & United Breweries comes one week after it pulled what was expected to be the biggest initial public offering of 2019 — commanding as much as $9.8 billion — for a minority stake in its Asia-Pacific subsidiary, Budweiser Brewing Company APAC Limited, on the Hong Kong Stock Exchange.

The news also comes a day after The Wall Street Journal reported that A-B InBev was exploring asset sales of business units in Australia, South Korea, Guatemala and Honduras in an effort to cut its $100 billion debt load incurred through its 2016 MegaBrew merger with SABMiller.

In a press release announcing the transaction, A-B InBev said “substantially all of the proceeds” from the sale would go toward paying down debt.

Once the transaction closes, A-B InBev said it would be able to “accelerate its expansion into other fast-growing markets in the APAC region and globally,” while also creating value for shareholders.

The divestiture also doesn’t close the door on a future IPO for A-B InBev’s Asia-Pacific business, excluding Australia. A-B InBev said it would consider an IPO if its gets “the right valuation.”

“We continue to see great potential for our business in APAC and the region remains a growth engine within our company,” A-B InBev CEO Carlos Brito said in a press release. “With our unparalleled portfolio of brands, strong commercial plans and talented people, we are uniquely positioned to capture opportunities for growth across the APAC region.”

For its part, Asahi said the acquisition of Carlton & United Breweries creates a “third core [business] pillar” to go along with its business units in Japan and Europe. Asahi also pointed to “sustainable economic growth” in Australia, where the company already sells brands such as Asahi Super Dry, Peroni and Pilsner Urquell. Carlton & United Breweries’ portfolio of brands, including Carlton and Great Northern, is “highly profitable, with EBITDA margin of over 40 percent,” the company added.

Included in the transaction for Asahi is the rights to sell A-B InBev’s portfolio of global and international brands — including Budweiser, Stella Artois and Corona (outside of the U.S.) — in Australia.

Asahi has been an active acquirer in 2019. The Tokyo-based company announced a $327 million deal to acquire the beer and cider business of London-based Fuller Smith & Turner in January.

As part of that acquisition, Asahi added Fuller’s beer and cider brands, such as London Pride, Frontier lager and Cornish Orchards cider, to its portfolio.

This isn’t the first time A-B InBev has divested a business unit to Asahi. The two companies completed a $7.8 billion deal in March 2017 for assets formerly owned by SABMiller — including Pilsner Urquell, Tyskie and Lech — in Central and Eastern European. The divestiture was part of A-B InBev’s effort to receive approval from the European Commission for the MegaBrew merger with SABMiller.

A press release announcing the divestiture is included below.

Anheuser-Busch InBev Agrees to Sell Carlton & United Breweries to Asahi Group Holdings, Ltd. and Continues to Evaluate a Potential IPO of Budweiser APAC

19 July 2019 – Anheuser-Busch InBev (Euronext: ABI) (NYSE: BUD) (MEXBOL: ANB) (JSE: ANH) has agreed to divest Carlton & United Breweries (CUB), its Australian subsidiary, to Asahi Group Holdings, Ltd. for 16.0 billion AUD, equivalent to approximately 11.3 billion USD, in enterprise value. The transaction represents an implied multiple of 14.9x 2018 normalized EBITDA. As part of this transaction, AB InBev will grant Asahi Group Holdings, Ltd. rights to commercialize the portfolio of AB InBev’s global and international brands in Australia.

The divestiture of CUB, once completed, will help AB InBev to accelerate its expansion into other fast-growing markets in the APAC region and globally. It will also allow the company to create additional shareholder value by optimizing its business at an attractive price while further deleveraging its balance sheet and strengthening its position for growth opportunities.

In addition, AB InBev continues to believe in the strategic rationale of a potential offering of a minority stake of Budweiser Brewing Company APAC Limited (Budweiser APAC), excluding Australia, provided that it can be completed at the right valuation.

Carlos Brito, Chief Executive Officer 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. With our unparalleled portfolio of brands, strong commercial plans and talented people, we are uniquely positioned to capture opportunities for growth across the APAC region.”

Substantially all of the proceeds from the divestiture of the Australian business will be used by the company to pay down debt. AB InBev’s commitment to reach a net debt to EBITDA target ratio of below 4x by the end of 2020 is not dependent on the completion of this transaction.

Asahi Group Holdings, Ltd. has committed financing in place and the transaction is subject to customary closing conditions, including but not limited to regulatory approvals in Australia. The transaction is expected to close by the first quarter of 2020.

This press release does not represent an offer to sell nor a solicitation to buy shares in either AB InBev or Budweiser APAC.

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