The deal is expected to close by the first week of 2017.
Japanese brewer Asahi Group Holdings is set to acquire beer brands from Anheuser-Busch InBev in a $7.8 billion deal. The deal will boost its presence in the region.
In s strategic development, AB InBev has agreed to sell Romania’s Ursus, Czechoslovakia’s Pilsner Urquell, Hungary’s Dreher, Poland’s Lech and Tyskie, to ease regulatory concerns of its $100 billion acquisition of SABMiller.
The deal is expected to close by the first half of 2017. It marks Asahi’s latest acquisition in Europe as well as its biggest acquisition to date.
Asahi has pegged the annual turnover of the beer business at 493.8 million euros before interest, tax, depreciation and amortisation (EBITDA) for this year through March.
Based on this, Asahi’s bid represents 14.8 times the amount brewing assets would typically fetch in mature markets.
Through this acquisition, the Japanese conglomerate is looking to offset the sluggish growth in its home market and boost sales.
As per Bernstein, an analyst at Trevor Stirling, the acquisition is likely to provide Asahi a 9% market share in the European beer market, excluding Russia, placing it third behind Carlsberg which has a 12% market share and Heineken, which has a market share of 20%.
With the news hitting the market, Asahi’s shares fell more than 6% but closed below 4.6%, since investors were worried how Asahi will fund the deal.
On its part, Asahi provided no clues. As per its balance sheet, it has accumulated debts worth $471 million.
Excluding this deal, as a whole, Japanese companies have spent $77.6 billion on outbound mergers and acquisitions in this this financial year as they seek to counter deflationary pressure, shrinking population and weak consumer spending.