Asahi to buy East European beer brands
from AB InBev for $7.8 billion
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[December 13, 2016]
By Thomas Wilson and Martinne Geller
TOKYO/LONDON (Reuters) - Asahi Group
Holdings <2502.T> will buy a group of eastern European beer brands from
Anheuser-Busch InBev <ABI.BR> for 7.3 billion euros ($7.8 billion),
boosting its presence in the region in the largest international beer
deal by a Japanese brewer.
Anheuser-Busch InBev agreed to sell the brands, including Czech market
leader Pilsner Urquell, Poland's Tyskie and Lech, Hungary's Dreher and
Romania's Ursus, to ease clearance from competition regulators for its
$100 billion takeover of SABMiller, finalised in October.
The deal, expected to close in the first half of next year, would be
Asahi's biggest acquisition and its latest purchase in Europe, where it
has also bought SABMiller's Italian brand Peroni and Dutch beer Grolsch.
It was announced on Tuesday morning, less than 24 hours after the
deadline for final bids, according to sources close to the matter.
Asahi said on Tuesday that the business had annual earnings before
interest, tax, depreciation and amortization (EBITDA) of 493.8 million
euros in the year to the end of March.
Based on that figure, its bid represents a multiple of 14.8 times, which
is higher than the 12 to 14 times brewing assets in mature markets
Asahi's winning bid compared with the 15 times EBITDA it paid for Peroni
and Grolsch, which was fueled in part by synergies in Australia with
Asahi's existing business.
Asahi, which is looking to offset sluggish growth in its home market,
said the acquisition would lift overseas sales as a proportion of total
sales to nearly a quarter from 16 percent in October.
Also expanding from its Japanese base, Sumitomo Corp <8053.T> agreed
last week to buy Ireland's Fyffes <FFY.I> for 751 million euros in a
deal that will merge the largest banana distributors in Asia and Europe.
The acquisition will give Asahi about 9 percent of the European beer
market, excluding Russia, said Bernstein analyst Trevor Stirling,
placing it third behind Heineken <HEIN.AS> with 20 percent and Carlsberg
<CARLb.CO> with 12 percent.
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Asahi Super Dry beer cans are displayed at the Asahi Group Holdings
headquarters in Tokyo, Japan, May 17, 2016. REUTERS/Toru Hanai/File
Sources had told Reuters that Asahi was a favorite to buy the
brands. In the first round of bidding, Asahi competed against a
consortium led by Swiss investment firm Jacobs Holding, Czech
investment firm PPF, China Resources <0291.HK> and private equity
firms Bain Capital and Advent International, they said.
Asahi shares fell more than 6 percent before closing down 4.6
percent, with market participants pointing to investor nerves about
how the deal would be funded.
Asahi gave no details, but a source close to the situation said the
Japanese brewer would use debt on its own balance sheet, which as of
September showed $471 million in cash, according to Thomson Reuters
Not including the Asahi deal, Japanese companies have spent $77.6
billion on outbound mergers and acquisitions this year, Thomson
Reuters data shows, as they seek to counter deflation, weak consumer
spending and a shrinking population at home.
The Asahi deal pushes this year's figure close to the record $87
billion Japanese companies spent on overseas M&A deals in 2015. It
is the second biggest acquisition by a Japanese brewer on record,
behind brewer and distiller Suntory Holdings Ltd's near $14 billion
purchase of Beam in January 2014.
(Reporting by Chang-Ran Kim, Thomas Wilson and Ritsuko Shimizu in
Tokyo, Martinne Geller in London and Philip Blenkinsop in Brussels;
Editing by Jason Neely and Keith Weir)
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