James Wilmore

Analysis - Anheuser-Busch InBev's M&A prospects for 2014

By | 7 January 2014

Will the worlds biggest brewer be back on the M&A trail this year?

Will the world's biggest brewer be back on the M&A trail this year?

How likely is it that Anheuser-Busch InBev will get out its chequebook in 2014? The brewer completed its US$20bn swoop for Mexico's Grupo Modelo last year, but one analyst believes its thirst for M&A – inside and outside of beer - remains high.

The most likely deal is for the Budweiser brewer to exercise its option to buy back South Korea's Oriental Brewery for around US$3.7bn, according to Stifel analyst Mark Swartzberg. A-B InBev sold Oriental to private equity group Kohlberg Kravis Roberts (KKR) & Co in 2009 for around $1.8bn. As part of the original deal, which took place shortly after InBev bought A-B in 2008, the Belgium-headquartered group agreed an option to re-acquire Oriental after five years. That deadline arrives in July, so it's one to watch.

Meanwhile, Swartzberg, a close A-B InBev watcher, believes the group is "at a crossroads" given its reduction in leverage and will "likely consider additional accretive M&A in and outside of beer". He raises the spectre of the well-worn rumour of a mega-deal with SABMiller, but offers no solid steer.

Outside of alcohol, Swartzberg hints that energy drinks producer Monster Beverage Corp could be a target, but will not be a “priority”. “We think its strategic value includes its economic importance to US distributors,” the analyst said in a note today (7 January). The Coca-Cola Co has previously been linked to Monster

Big beer has suffered for a while in North America as craft continues to raise its share. But, A-B InBev's short-term prospects in the region are looking healthier, according to Swartzberg. He predicts a return to volume growth in the region for the brewer in 2014, helped by new packaging and a major advertising push for its Bud Light brand.  

In Brazil, the group is also expected to get a major boost from this Summer's FIFA World Cup, through its AmBev unit in the country.

Expert analysis

Anheuser-Busch InBev NVSA (ABI) - Financial and Strategic SWOT Analysis Review

Anheuser-Busch InBev NVSA (ABI) - Financial and Strategic SWOT Analysis Review provides you an in-depth strategic SWOT analysis of the company’s businesses and operations. The profile has been compiled by GlobalData to bring to you a clear and an unbiased view of the company’s key strengths and weaknesses and the potential opportunities and threats. The profile helps you formulate strategies that augment your business by enabling you to understand your partners, customers and competitors better.

Sectors: Beer & cider, Mergers & acquisitions

Companies: SABMiller, Coca-Cola Co, Anheuser-Busch InBev

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