BELGIUM: Anheuser-Busch InBev eases pressure for disposals
Anheuser-Busch InBev is no longer under pressure to sell assets in 2009, due to progress on cost savings and a strong cash flow, analysts believe.
A-B InBev said earlier this year that it would need to raise US$3.5bn in disposals by November, in order to help pay off a $7bn bridge loan taken out to fund InBev's $52bn takeover of its US rival.
Better-than-expected progress on synergies from the deal, however, looks to have given the brewer more time to play with.
A-B InBev said in its full-year results for 2008, released earlier this month, that it has raised its synergies target from an original US$1.5bn in savings to $2.25bn. It said that it expects to achieve $1bn in savings in 2009.
Trevor Stirling, analyst with the Sanford Bernstein, said in a note: "Furthermore, after the bond issue so far this year and the Tsingtao disposal, only $3bn of the short-term debt remains due for repayment in November this year, which should be easily covered by free cash flow from the business. Hence A-B InBev does not need to do any disposals in 2009."
Reports out of Asia last month said that A-B InBev had completed a first round of bidding for the group's Oriental Brewery in South Korea.
A report by Reuters today (12 March) cited sources close to the situation as saying that a deal could be put on hold, however. With a deteriorating South Korean economy, A-B InBev may prefer to bide its time until a better price can be secured.
Speculation has also been rife within the drinks trade about other A-B InBev assets potentially on the block. There is rumoured interest in the group's Russian beer business, Sun InBev, and also Staropramen in the Czech Republic, as well as its beer operations in Germany.
Stirling said: "We continue to believe that management is committed to achieving $7bn of disposals, and indeed is very strongly incentivised to de-lever, but there is no need for a fire sale of assets."
Another analyst told just-drinks: "The fact that they [A-B InBev] increased synergy guidance this early in the game is surprising and quite impressive."
This, the analyst said, should help to "cushion" the group's financial performance against the worst effects of the global economic downturn.
Both Anheuser-Busch InBev - purveyor of the president's favorite tipple - Bud Light - and MillerCoors are raising prices at the same time, during a recession and while beer demand is slumping. With an...
A shift in demand for premium beers in western markets and a cautious second-half outlook has taken some of the shine off a strong first half performance from Anheuser-Busch InBev, writes Michelle Rus...
Czech brewer Budejovicky Budvar does not have an exclusive right to the name "Bud" in EU member states, the European Court of Justice (ECJ) has ruled....
Anheuser-Busch has expanded the number of test markets for its Select 55 beer brand in the US....
Cider firms in the UK may look to lower the alcohol content of their products, following in the footsteps of a new wave of lower alcohol beers, the new head of the country's cider trade body believes....
C&C Group has declined to comment further on reports claiming that it is looking to expand its Magners cider brand to the Nordic markets....
Beringer Vineyards is to sponsor the PGA Tour, Champions Tour and Nationwide Tour in the US beginning next year....
The top ten stories published on just-drinks this week:...
- A-B InBev and its SABMiller divestments - Focus
- SABMiller in Cent'l & E Europe - What is for sale?
- Paddy Irish whiskey - The Facts
- Is the wine industry confusing its consumers?
- Where does AB InBev see the future of beer?
- Pernod Ricard to widen Our/Vodka sales reach
- Remy Cointreau names new Travel Retail exec
- Leonardo DiCaprio joins Runa drinks board
- Pernod in talks to sell Paddy whiskey to Sazerac
- Private equity poised for SABMiller Europe buy?
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends
- Global travel retail insights - market forecasts, product innovation and consumer trends
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends
- Carbonates in India
- Consumer and Market Insights: Spirits Market in the US