Japanese brewer Asahi ready to spend “billions of dollars” on acquisitions

Tokyo businessmen toast with mugs of Asahi Breweries' beer after their office hours at a beer garden at the rooftop of Nihonbashi-Mitsukoshi department store in Tokyo July 30, 2013. REUTERS/Issei Kato

Japan’s Asahi Group Holdings is ready to spend “billions of dollars” more on acquisitions, after having recently spent $11 billion to acquire beer brands across Europe from Anheuser-Busch InBev, its top executive said.

Akiyoshi Koji, president of the largest beer maker in Japan, said “bolt-on” acquisitions to boost the European businesses, including beer makers and distributors, were a high priority for Asahi. He did not say exactly how much Asahi was looking to spend on the acquisitions and did not name potential targets.

“If there are big investment opportunities, we can make big investments,” he told Reuters in an interview on Thursday.

Asahi, known for Japan’s best-selling beer, Asahi Super Dry, instantly built a sizable foothold in Europe after doing back-to-back deals with InBev that culminated earlier this year. The deals gave it ownership of brands including Peroni, Grolsch and Pilsner Urquell.

Asahi’s balance sheet had cash and cash equivalent of about $737 million as of June 30, meaning it will have to rely a fair bit on debt for the potential acquisitions.

Koji said the company’s net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) ratio is expected to rise to 4.82 at this year’s end from 2.52 last year as a result of the European acquisitions.

But it is expected to fall to around 3 in 2020. “That’s a normal level,” he said, adding it would allow the company to spend billions of dollars without hurting its credit ratings.

In Asia, global beer companies are closely watching Vietnam’s plan to sell a majority stake in beer makers Sabeco and Habeco.

Koji said Asahi has been studying Sabeco but declined to comment further: “As a growth market, Vietnam is attractive, but our judgement will be based on whether the market fits our premium beer strategy,” he said.

But it’s not all about acquisitions at Asahi under Koji’s watch. The 65-year-old career insider who took the current post last year has also been reviewing the company’s asset portfolio to divest those deemed not a strategic fit. He said minority investments are under scrutiny since they do not give the company management control.

In June, Asahi said it would sell its 20 percent stake in Chinese brewer Tingyi-Asahi Beverages Holding Co for $612 million.

Asahi has a 20 percent stake in China’s second-largest brewer Tsingtao Brewery Co . Koji said he could not comment on whether the company is considering selling its Tsingtao stake, noting he plans to make some announcement on the results of the portfolio review by this year’s end.

Reuters

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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).

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