Bud Light: Brewer Plans Slimmed-Down IPO in Hong Kong -- Update
September 12 2019 - 5:32AM
Dow Jones News
By P.R. Venkat and Joanne Chiu
The parent of Budweiser is betting investors will go for a
lighter brew.
Two months after calling off a blockbuster initial public
offering in Hong Kong, European beer giant Anheuser-Busch InBev SA
started shopping a slimmed-down version of its Asia business to
investors in the city and is hoping to pull off a deal in the
coming weeks.
The business, Budweiser Brewing Co. APAC Ltd. is aiming to raise
$5 billion in an IPO that could be completed by the end of
September, according to people familiar with the matter.
The share sale is likely to be formally launched next week, some
of the people said. Budweiser Brewing plans to line up several
large institutions that will commit to buying chunks of stock as
cornerstone investors in the IPO, one of the people added.
The offering comes as Hong Kong's market is recovering from a
summer of protests in the city that have caused business
disruptions and dragged down prices of retail and property stocks.
Still, bankers say they are optimistic about a pickup in deal
activity and many investors have cash to put to work, which should
help demand for new stock sales.
Budweiser Brewing, which sells beers such as Budweiser, Stella
Artois, Corona and Hoegaarden in Asia, on Thursday filed a draft
prospectus with Hong Kong's stock exchange. JPMorgan Chase &
Co. and Morgan Stanley are advising the company on the IPO.
In mid-July, AB InBev canceled a nearly $10 billion listing of
its Asian business, blaming market conditions at the time. A deal
of that size would have been the year's biggest IPO. At the time,
several prospective investors said they were deterred by high
valuations that the company was seeking.
Shortly after calling off the deal, AB InBev carved out its
Australian unit--which had been part of the company it earlier
tried to list-- and sold it to Japan's Asahi Group Holdings Ltd.
for $11.3 billion. It said it would use the proceeds to help reduce
debt.
The company now planning to list in Hong Kong derives most of
its sales from China, South Korea, India and Vietnam--countries
where beer consumption is growing more rapidly.
Budweiser Brewing said its revenue grew 10.5% in 2018 to $6.74
billion, while net profit last year rose about two-thirds to $959
million.
The company could fetch a market valuation of between $44
billion and $54 billion, Bernstein Research estimated in a research
note Thursday.
"It's not immediately clear why (AB InBev) is in such a rush to
complete the IPO following the Australia deal," the analysts wrote,
adding that the company could be trying to take advantage of high
beer valuations in China or may have an acquisition deal planned
for the Asia business.
The Hong Kong-listed stocks of Chinese brewers have performed
better than the broader market this year. China Resources Beer
Holdings Co., the country's largest brewer, and Tsingtao Brewery
Co. have each climbed more than 50%, versus the Hang Seng Index's
4.8% gain. China Resources Beer currently trades at about 54 times
forecast 2019 earnings, while Tsingtao trades at 34.9 times,
according to Refinitiv data
"Many beer stocks are richly valued," said Gary Zhang, a partner
at Shenzhen Grand Gold Capital Co., an asset manager that holds
some stocks in Hong Kong. He said China's beer market is fairly
saturated, and more consumers are instead going for other types of
alcohol like wine and baijiu, a spirit distilled from sorghum.
AB InBev, which makes one out of every four beers sold
world-wide, owns hundreds of brands in dozens of countries after a
global buying spree that gave it Budweiser, Stella Artois and
Corona. But those deals saddled the Belgian brewer with about $100
billion in debt; meanwhile, beer sales have slowed in the U.S. and
other major markets.
Write to P.R. Venkat at venkat.pr@wsj.com and Joanne Chiu at
joanne.chiu@wsj.com
(END) Dow Jones Newswires
September 12, 2019 05:17 ET (09:17 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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