AB InBev to list its Asia-Pacific business in Hong Kong in $9.8 billion IPO

The IPO values Budweiser Asia, AB InBev’s Asia-Pacific business, at 16-18 times its enterprise value (EV) to EBITDA. This will be the biggest IPO to hit the market in 2019.

In a significant development, Anheuser-Busch InBev NV stated, it is seeking to raise up to $9.8 billion by listing its Asia-Pacific business in Hong Kong, in what will be the world’s biggest initial public offering in 2019.

According to termsheets, Budweiser Brewing Company APAC, whose portfolio contains more than 50 beer brands includes Stella Artois and Corona, is selling 1.6 billion primary shares at between $5.13-$6.02 (HK$40-$47) apiece.

Through the IPO AB InBev is likely to raise between $8.3 billion and $9.8 billion before any over-allocation option is included; after the IPO Budweiser Asia will have a market capitalization of up to $63.7 billion

Heavily indebted AB InBev has been working to reduce its debt profile, which is more than $100 billion, following the acquisition of its rival SABMiller in 2016.

The idea behind listing its Asia-Pacific business in Hong Kong is that it wants to create a champion in the Asia-Pacific region, where sales are on a growth path and where increasingly wealthy consumers are opting for higher margin premium beers.

“In addition to paying down debt, the deal provides AB InBev with a ‘platform for M&A’ whereby local brewers such as ThaiBev might prefer to tie up with a locally focused player in an Asian currency,” said Nico von Stackelberg of Liberum.

With the news reaching the market, shares of AB InBev traded higher by 1.4% at 79.36 euros.

The IPO pricing values Budweiser Asia at 16-18 times its enterprise value (EV) to EBITDA (earnings before interest, tax, depreciation and amortization) ratio, according to termsheets.

Incidentally, EV-EBITDA is a common valuation metric that seeks to help investors compare companies’ operations and strip out the different effects of financing costs.

According to Refinitiv data, Budweiser Asia’s ratio compares with an EV-EBITDA value of 11 for AB InBev itself, 10 for Japan’s Kirin and 15 for China-focused Tsingtao.

Budweiser Asia’s deal is expected to price in New York on July 11 and the stock will debut in Hong Kong on July 19, according to the termsheet.

AB InBev’s spokeswoman declined comment.

Morgan Stanley and JPMorgan are the joint sponsors of the float.

Deutsche Bank and Bank of America Merrill Lynch are the joint global coordinators for the IPO.

Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Strategy

Tags: , , , , , , , , , , , , , , , , , , , , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: