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