Article

Posted on 27 Nov 2019

Anheuser-Busch InBev Announces the Divestiture of Carlton and United Breweries to Asahi Group Holdings, Ltd.

In July 2019, Anheuser-Busch InBev (NYSE: BUD) announced its divestiture Carlton & United Breweries (CUB), its Australian subsidiary, to Asahi Group Holdings, Ltd. The company has signed this deal for AUD 16 billion, equivalent to approximately USD 11.3 billion. Asahi Group Holdings, Ltd. (TYO: 2502), a beer and soft drink company based in Tokyo, Japan, will be granted the rights by AB InBev to commercialise further and enhance AB InBev’s portfolio of global and international brands in Australia. The transaction is expected to close by the first quarter of 2020, which remains subject to customary closing conditions and regulatory approvals in Australia.

Anheuser-Busch InBev or AB InBev is a Belgium-based multinational drink and brewing company, which is considered as one of the largest fast-moving consumer goods companies in the world. The company is committed to brewing the best beers using the natural ingredients, further developing great brands. Its diverse portfolio consists of over 500 beer brands such as, Budweiser®, Corona®, Beck’s®, Castle®, and Skol®, among others, which ranges from global to local brands. Anheuser-Busch has diversified business with a balanced exposure to developed and developing markets, further leveraging the collective strengths of approximately 175,000 employees. The company is operational in nearly 50 countries worldwide. In 2018, AB InBev recorded a revenue of around USD 54.6 billion (excluding JVs and associates).

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The divestiture of Carlton & United Breweries by AB InBev is aimed at accelerating its growth by expanding its business into other emerging markets in the Asia Pacific region and globally. This step will provide the company a chance to create additional shareholder value via the optimisation of its business at a competitive price and further deleverage the company’s balance sheet, thus, strengthening its position in the global market.

The increasing urbanisation and rising disposable incomes in the Asia Pacific region are leading to an improved living standard of consumers, who are ready to spend more on premium quality products. For the company, the Asia Pacific remains the key market, and AB InBev continues to see great potential for its business in the region. Further, the company is determined to target this region with its unparalleled portfolio of brands, strong commercial plans, and new launches to capture opportunities for growth across the region.

The company has decided to utilise all of the proceeds from the divestiture of its Australian business to pay down its debt. Although AB InBev does not rely on the completion of this transaction to achieve its commitment to obtain a net debt to EBITDA target ratio of below 4x by the end of 2020.

Moreover, AB InBev continues to believe that the right valuation of a minority stake of Budweiser Brewing Company APAC Limited (Budweiser APAC), excluding Australia, can provide the company with increased growth opportunities in the Asia Pacific region. The company is determined to execute this strategic rationale, believing in its potential.

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