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Brewing problems as AB Inbev completes its IPO in Asia through Investing.com




© Reuters.

By Geoffrey Smith

Investing.com – If you think the IPO market is a decent indicator of overall market health, you're probably a little worried this morning.

Anheuser Busch Inbev (BR 🙂 The biggest brewer in the world, the biggest IPO of the year so far over the weekend, the partial divestiture of its $ 8 billion Asian business, citing "adverse market conditions".

It's the second big thing in a matter of days, which had to be resolved after the insurance giant Swiss Re (SIX) pulled the listing of its British business ReAssure, which should bring in over 3.5 billion US dollars. Like the multinational brewer, Swiss Re was responsible for "increased caution and weak basic demand".

The two companies have little in common, be it industry, cyclical or geographic. One is a mature, UK-focused business ̵

1; likely a declining one – that revolves around interest rates and longevity, and the other is a criterion for the growing taste of the Chinese middle class for beer. So if they use a nearly identical language for their decisions, they should raise one or two eyebrows.

AB Inbev is likely to be subject to closer scrutiny in the short term, as the failure is another negative market ruling on the merger agreed in 2015 by AB InBev and SAB Miller. This deal, which saddled the merged company with one of the world's largest debt burdens, failed to deliver the promised profits: the stock has fallen nearly 30% since the date of the agreement, a period in which competitors such as Carlsberg (CSE:), Constellation Brands (NYSE 🙂 and Heineken (AS 🙂 increased by a third to a half.

AB Inbev fell 1.6% in early morning trading in Europe on Monday morning when it was almost all European and Asian markets were higher, benefiting from some better than expected Chinese data and. The value remained unchanged at 386.12, while the value in Germany rose by 0.2% and the value remained largely unchanged.

It's not unusual, of course, for shoppers and sellers to change their minds about what a company is worth, but it's more difficult when the seller's idea of ​​the right price is determined by the price of an earlier deal, which in retrospect is unrealistic looks.

However, the management of AB Inbev may still be eligible to close the deal. The company's profitability is heavily dependent on the exchange rate, as most of its $ 110 billion of debt is settled in US dollars and most of its revenue comes from emerging markets. With Federal Reserve easing and emerging market currencies strengthening (South Africa, one of the Group's key emerging markets, tested at 5 months high based on Chinese data).

Justifying the management of AB Inbev on the narrower issue of timing still leaves them free to fulfill their long-term promises in this website is not necessarily accurate in real time. All CFDs (stocks, indices, futures) and forex prices are not provided by exchanges, but by market makers. Therefore, prices may not be accurate and may differ from the actual market price. This means that prices are indicative and not suitable for trading purposes. As a result, Fusion Media assumes no responsibility for any trade loss that you may incur as a result of using this data.

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