A series of aggressive acquisitions in a rapidly consolidating market has made AB InBev the world's biggest brewer by a considerable margin. The process began in 2000 when Belgian company Interbrew bought two of the UK's biggest beer marketers as well as a collection of German brands including Beck's. Added to the group's existing European flagship Stella Artois, and a strong portfolio of regional beers, these gave the company the right to describe itself as the "world's local brewer" by 2003, with a leading position in virtually every country in which it had a presence. This was followed in 2004 by what was in effect the reverse takeover of Interbrew by South American brewer AmBev to form a new global giant under the name InBev. That deal gave the enlarged group a far more extensive global profile than its main rivals of the time, Anheuser-Busch and SABMiller, but it still lacked a significant presence in the US, the world's biggest beer market. That changed dramatically in 2008 when InBev succeeded in acquiring American giant Anheuser-Busch for a whopping $52bn. The resulting group widened its lead further in 2013 with a deal to acquire the shares it didn't already own in Mexican partner Modelo, owners of Corona Extra. This steady expansion reached its crescendo in 2015 with a deal to acquire nearest rival SABMiller as well for an extraordinary $104bn, primarily to achieve a strong foothold across Africa. (Much of the rest of SABMiller was sold on to other buyers). As a result, in addition to lead global brands Budweiser, Stella Artois, Beck's and Corona (outside the US), the global portfolio includes key local jewels including Castle Lager in South Africa, Skol in Brazil, Leffe, Hoegaarden and Jupiler in the Benelux region, Franziskaner in Germany, Harbin in China, and VB and Carlton in Australia. When you reach the top, though, there's nowhere you can really go but down. With no potential acquisition targets left, growth has plateaued, prompting the spin-off of regional subsidiaries and even diversification into other drinks categories. AB InBev's hard-pressed operations in Russia and Ukraine were demerged into an existing JV with Anadolou Efes of Turkey in 2018. In summer 2019, the group started plans for a $10bn IPO of its Asia Pacific arm, only to cancel the float only a few weeks later. Instead it sold off its Australian division CUB, and then relaunched an IPO for the remainder of the APAC operations. Group revenues for 2018 were $54.6bn with net income of $5.7bn. Latin America accounted for 40% of revenues; North America for 28%. Total beer volumes were 505m hl, with another 62m hl of other drinks. The company is a key local licensee for PepsiCo brands in Latin America. Acquisitions have left AB InBev with a massive $102.5bn debt mountain. Brazilian-born Carlos Brito is CEO, and the group is effectively controlled by 3G Capital, the investment umbrella for Brazilian entrepreneurs Jorge Paulo Lemann, Marcel Herrmann Telles and Carlos Sicupira.
Capsule checked 21st May 2019
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Adbrands Daily Update 24th Sep 2019: The IPO of AB InBev's Asia Pacific assets was back on following a deal to strip out Australian arm Carlton & United Breweries, which is being sold to Asahi Breweries. The newly retitled Budweiser Brewing Company APAC floated a little over 10% of its equity in Hong Kong this week at a total valuation of $45bn. It was the year's second largest IPO to-date after Uber.
Adbrands Daily Update 19th Jul 2019: Just a few days after the collapse of plans to issue an IPO of its Asia Pacific assets, AB InBev announced the sale of Australian arm Carlton & United Breweries to Asahi Breweries. It includes all CUB's own brands as well as local rights to the AB InBev import portfolio. A price tag of US $11.3bn makes this Asahi's biggest ever international purchase. It follows the acquisition of another chunk of what was once SABMiller two years ago: Peroni, Grolsch and Urquell in Europe. It will also mean that both of Australia's two dominant brewers are Japanese-owned. (Kirin already owns CUB's main rival Lion). AB InBev may also divest other parts of its APAC division; or may attempt to restart an IPO for the smaller business.
Adbrands Daily Update 13th Jul 2019: Only a couple of weeks after starting to canvas investor interest, AB InBev scrapped the planned IPO of its Asia Pacific division. It said several factors were responsible, including "prevailing market conditions".
Adbrands Daily Update 3rd Jul 2019: The upcoming IPO of AB InBev Asia Pacific will almost certainly be the biggest ever for the global food and beverage industry, topping Kraft Foods' 2001 float. The group aims to issue around 15% of the unit's equity, raising just under $10bn on a $63.7bn valuation. Launch date is set for July 19th. AB InBev APAC is the #2 brewer by sales in China and the local leader in Australia. Other key markets are South Korea, India and Vietnam.
Adbrands Daily Update 8th May 2019: AB InBev said it is considering a partial IPO of its Asia Pacific division. Such a move would create a relationship similar to that between the main corporate parent and its majority-owned Latin American subsidiary AmBev, which is locally quoted in Brazil. Valuations of the Asian business, whose two biggest markets are China and Australia, are around $40bn-$50bn. A float would raise cash for further local acquisitions and would also help to reduce the corporate parent's still-substantial $100bn debt.
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