Anheuser-Busch InBev shares jump on report of Asian business IPO

Bottles of Oriental Brewery Co. Cass Fresh beer, right, are displayed for sale at a supermarket in Incheon, South Korea. Photographer:SeongJoon Cho/Bloomberg

Anheuser-Busch InBev NV shares jumped the most since 2015 after people with knowledge of the matter said the world’s largest brewer is considering an initial public offering of its Asian operations as a way to unlock value after a string of acquisitions left it saddled with debt.

The Leuven, Belgium-based maker of Budweiser has been talking with potential advisers about the possibility of listing its Asian business, according to the people. Any deal could raise more than $5 billion, the people said, asking not to be identified as the information is private.

The company’s shares rose as much as 7.2 percent, the most since September 2015, to 65.63 euros in Brussels trading on news of the potential listing.

AB InBev may seek to value its entire Asian business at around $70 billion through the share sale, though the eventual figure would depend on market demand and growth prospects for the business, the people said. Deliberations are at an early stage, and AB InBev could opt against pursuing a transaction, according to the people.

A value of $70 billion “looks very excessive to us,” James Edwardes Jones, an analyst at Royal Bank of Canada, wrote in a note.

The world’s largest brewer has been looking to reduce borrowings following its purchase of SABMiller Plc for more than $100 billion in 2016. AB InBev shares fell 38 percent last year, making it one of the worst performers on the Euro Stoxx 50 index of European blue chips.

“We are always looking at opportunities to optimize our business and drive long-term growth, of course subject to our strict financial discipline,” a representative for AB InBev said in a statement, declining to comment on specific deals. “We are committed to our businesses in the Asia Pacific region and excited about the potential in this geography.”

AB InBev hasn’t chosen a listing venue, though Hong Kong is a possibility, the people said.

Missed Expectations

Investors have been questioning AB InBev’s strategy after its third-quarter results missed expectations and the company halved its dividend. Asia Pacific contributed $2.3 billion of AB InBev’s revenue in the quarter ended Sept. 30, accounting for 17 percent of global sales, according to data compiled by Bloomberg.

Asia has been a key battleground for international brewers as consumption of mass-market lager slows in North America and Europe. The continent’s prospects dimmed slightly in the third quarter, with Heineken NV in October reporting its weakest Asian beer volume growth in three years.

AB InBev is the largest foreign beer maker in China, with a 16 percent share of the market in 2017, according to research firm Euromonitor. It has been focusing on selling higher-end brands in the country including Corona and beers made by Boxing Cat, a Shanghai-based craft brewer it acquired two years ago.

The Asia Pacific beer market is predicted to grow to $219 billion by 2022, up from $181 billion in 2017, according to Euromonitor.

AB InBev had 49 percent market share in 2017 in South Korea, where it owns brands like Cass, Euromonitor data show. The company bought South Korean brewer Oriental Brewery Co. in 2014 for $5.8 billion, regaining a business that it had sold to private equity several years earlier.

Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.