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Home / Business / Budweiser Brewer examines the sale of assets after the demise of the IPO in Asia

Budweiser Brewer examines the sale of assets after the demise of the IPO in Asia



Anheuser-Busch InBev
SA

is considering selling business units in South Korea, Australia and Central America to reduce the massive debt pile as the company follows a hedge plan after discontinuing the listing of its Asian business, the persons familiar with the matter said.

Australian companies producing popular beers such as Cass and Victoria Bitter were integral parts of the canceled Asian IPO. The brewer hopes to raise at least $ 10 billion from the sale of assets.

private equity firm

KKR

& Co. contacted AB InBev in May to buy some of the Asian assets. Previously, KKR bought the Korean business and sold it to AB InBev in 2014 for $ 5.8 billion. Also in May Japanese brewer

Asahi Group Holdings
Ltd.

One person has expressed interest in buying the Australian business.

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AB InBev, which sells every fourth beer sold worldwide, owns hundreds of brands in dozens of countries after Budweiser, Stella Artois and Corona had a worldwide shopping spree. However, dealmaking also brought the company more than $ 1

00 billion in debt, while global beer sales eased. Based on the market conditions, the biggest IPO of the year was canceled. The main goal of the listing was to reduce the company's debt burden.

Ultimately, the company hopes to reduce its debt to about 80 billion US dollars, one of the respondents said. At this level, the company could continue to make acquisitions and capital investments and would not risk being downgraded below investment grade by rating firms.

Another option on the table is again the cut in AB InBev's dividend, which was halved last fall, but some board members are reluctant to do so, the persons familiar with the matter said. Currently, the company pays annual dividends of approximately $ 4 billion.

The businesses targeted for sale in South Korea, Australia, Guatemala and Honduras are attractive to buyers as they have a high market share and generate cash. At the same time, they are not fast-growing markets, so a sale would not affect the growth prospects of AB InBev.

South Korea and Australia belonged to a single entity, which also included Japan, which generated about 3.3 USD in 2018, according to IPO documents billion in sales. The Australian business includes local rights to the Foster brand, which is owned outside of Australia

Heineken

N.V. and

Molson Coors Brewing
Co.

AB InBev considered the sale of one or more of these assets as an alternative to the IPO, but decided, in the opinion of the persons familiar with the matter, to first vote for the listing. The Australian, a national newspaper, previously reported that Asahi expressed interest in the Australian business.

The world's largest brewer has struggled to reduce debt as he faces challenging emerging markets and declining beer consumption in key regions. In the US, AB InBev's largest market, the flagship brands Budweiser and Bud Light have lost market share as consumers abandon American stocks of wine, spirits, craft beer and Mexican imports.

The IPO would have allowed AB InBev to reach market share According to Guggenheim analyst Laurent Grandet, the debt ratio for 2020 is expected to be a year ahead of schedule.

Write to Jennifer Maloney at jennifer.maloney@wsj.com and Saabira Chaudhuri at saabira.chaudhuri@wsj.com

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