AB InBev Sells Australian Business for $11.3B

The sale to Japan's Asahi "puts the Asia IPO misstep to bed with the company both deleveraging and getting a rich multiple for a developed market b...
Matthew HellerJuly 19, 2019
AB InBev Sells Australian Business for $11.3B

Moving swiftly to raise cash after scrapping an IPO of its Asian unit, Anheuser-Busch InBev has agreed to sell its Australian operations to Japan’s Asahi for an enterprise value of $11.3 billion.

The announcement on Friday of the sale of Carlton & United Breweries, which makes such beers as Foster’s and Victoria Bitter, came only a week after AB InBev said it was not proceeding with the IPO of Budweiser APAC, citing market conditions.

The world’s largest brewer has been seeking cash to reduce a $106 billion debt load inflated by its acquisition of SABMiller in 2016. “Substantially all of the proceeds from the divestiture of the Australian business will be used by the company to pay down debt,” AB InBev said in a news release.

According to the Financial Times, citing a source close to the deal, AB InBev was able to move quickly because Asahi had made an earlier offer for the Australian business, which AB InBev rebuffed as it pursued the IPO. Once the listing failed, AB InBev contacted Asahi almost immediately.

The sale price represents a valuation of 14.9 times EBITDA. AB InBev trades at 12.5 times EBITDA, similar to smaller rival Heineken and slightly ahead of Carlsberg, according to S&P Capital IQ data.

“This deal puts the Asia IPO misstep to bed with the company both deleveraging and getting a rich multiple for a developed market business,” said Ed Mundy, an analyst at Jefferies.

The Budweiser APAC flotation would have been the largest of the year, with AB InBev expecting to raise up to $9.8 billion. Analysts said investors balked at the company’s valuation of the business.

“The disposal of the Australian business hives off a mature, highly profitable part of AB InBev’s Asian operation, so any renewed attempt at an IPO would be likely to include only the higher-growth countries of China, India, and Vietnam,” the FT said.

Asahi, known for its Super Dry beer brand, has been increasing its global presence, previously acquiring several former SABMiller brands including Peroni and Grolsch from AB InBev.

Photo: STEFAN HEUNIS/AFP/Getty Images