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The velveted brickbats were flying earlier in the week after Anheuser-Busch InBev pulled the plug on its Asia-Pacific IPO. "A rare misstep," said Bernstein. "The signal is pretty bad," added AlphaValue.

Asahi could save money for A-B InBev in Australia by making Corona production local

Asahi could save money for A-B InBev in Australia by making Corona production local

Those groans turned into a collective "A-ha!" today, as A-B InBev announced it will sell its Australian Carlton & United Breweries unit to Asahi

Suddenly, the brewer's grand plan was revealed (though to be fair, the penny started to drop late yesterday when The Australian reported a sale was on the cards, despite the newspaper underreporting the asking price by about US$4bn). In one fell swoop, CEO Carlos Brito morphed from financial butterfingers to master tactician. Never mind that Brito's new strategy was the tried-and-tested one of selling off company assets to pay down debt. Or as analysts at Liberium called it: "Dust[ing] off the old playbook."

There is of course, slightly more to today's deal than a simple cash transaction. CUB will bring in AUD11.3bn, which at a multiple of 14.9 of EBIT may not be the largest haul in recent alcohol M&A history (A-B InBev paid a 17.1 multiple for SABMiller). Nor is the value above what SABMiller paid for CUB back in 2012 (AUD11.5bn).

But, the amount is more than A-B InBev expected to raise from its aborted IPO in Hong Kong and will go some way to paying down the brewer's onerous SAB debt. Furthermore, as A-B InBev confirmed today, an IPO is still a possibility at a later date. Indeed, a number of analysts said a Hong Kong listing may be more appealing to investors minus CUB, as it means A-B InBev will be more focussed on faster-growing markets. The Australian market, while cash-rich, is at a standstill compared to China, Vietnam and Cambodia.

There are other benefits for A-B InBev. Liberium said that agreed licensing deals for the brewer's international brands such as Budweiser and Stella Artois could lead to local production for Corona, cutting the cost base on the light lager. The main concern for A-B InBev, however, is working through its debt so it can be light enough to do what it does best - buy more assets, preferably in China.

A report in the Wall Street Journal that preceded today's announcement said A-B InBev is looking to get its debt mountain below US$80m, from the current load of around $100m. While an IPO is still a possibility, the newspaper reported sources as saying operations in Guatemala and Honduras might be sold. According to Liberium, this move could bring in $500m.

Meanwhile, sources told the WSJ that A-B InBev's South Korean business, Oriental Brewery, could also be sold back to private-equity group KKR. Other than turning the unit into the beer industry's equivalent to a tennis ball - A-B InBev sold OB to KKR in 2009, but bought it back in 2014 - this deal could score A-B InBev more than $6bn, Liberium estimates.

If those deals were to happen, A-B InBev would be under the $80m barrier and thus clear of the threat of an investment-rating downgrade. The acquisition-hungry company could then start hunting down its next opportunity.


Expert Analysis

Lager Beer (Beer & Cider) Market in Canada - Outlook to 2022: Market Size, Growth and Forecast Analytics

Lager Beer (Beer & Cider) Market in Canada - Outlook to 2022: Market Size, Growth and Forecast Analytics

Lager Beer (Beer & Cider) Market in Canada - Outlook to 2022: Market Size, Growth and Forecast Analytics is a broad level market review of Lager Beer market in Canada.

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