CUB owner to sell stake in APAC business for $5billion+

May 15, 2019
By Alana House

AB InBev, the owner of Carlton & United Breweries (CUB), has filed plans with the Hong Kong stock exchange to offer a minority share of its Asia-Pacific business to market investors.

The proposal will be via an initial public offering, in a deal that Reuters suggests could be worth at least $US5billion.

Budweiser Brewing Company APAC Limited is the largest beer company in Asia Pacific by retail sales value. It produces, imports, markets, distributes and sells a portfolio of more than 50 beer brands, which it owns or has licensed, including Budweiser, Stella Artois and Corona, Hoegaarden, Cass, Great Northern, Harbin and Victoria Bitter. Its principal markets are China, Australia, South Korea, India and Vietnam.

Net income of the Asia business was $1.4billon in 2018, the filings showed, as compared with $1.1billion in 2017. Revenue for 2018 was $8.5billion, representing 6.1% organic growth.

AB InBev said it had seen market share in the Australian beer market increase to 48.8% in 2018, from 44.8% in 2013. 

Analysts have said that $40 billion-$50 billion would be a reasonable valuation for the Asia-Pacific business.

“The move comes as the Belgium-based giant is working to reduce a $102.5 billion debt pile accumulated following the late 2016 purchase of rival SABMiller for around $100 billion,” Reuters notes.

AB InBev said it would continue to maintain a significant holding in Budweiser Brewing Company APAC. It said the timing of the sale would depend on market conditions, but that its current expectation was to complete the deal over the summer.

“The merits of these initiatives are based upon the creation of an APAC champion in the consumer goods space,” Chief executive Carlos Brito said. “Furthermore, our superior portfolio brands and leadership position in the beer industry provide them attractive platform for potential M&A in the region.”

Asia is the largest beer consumption region for AB In Bev by volume, accounting for 37% globally, and also one of the fastest-growing markets, the company said in its draft prospectus filed on Friday.

The region produced 18% of AB InBev’s sales by volume and 14% of its underlying operating profit last year from sales worth $8.46 billion, according to the prospectus.

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