Anheuser-Busch InBev SA, the world's largest brewer, has agreed to buy South Korea's Oriental Brewery Co Ltd (OB) for $5.8 billion including debt, regaining ownership of a key Asian asset at a time of strong industry growth across the region.
The sale by KKR & Co and Affinity Equity Partners represents Asia's biggest ever private equity sale via M&A in dollar terms, rewarding them with returns of more than five times their investment. OB had total debt of $922 million at end of 2012, according to the company's latest available figures.
With the deal, AB InBev gains not only a South Korean brewer that has rapidly grown to command 60 percent market share but also distribution channels for its own brands such as Budweiser and Stella Artois that have room to grow in an underdeveloped premium beer segment.
"OB will strengthen our position in the fast-growing Asia-Pacific region and will become a significant contributor to our Asia-Pacific zone," Carlos Brito, chief executive officer of AB InBev, said in a statement. AB InBev also said it hopes to export OB brands more widely.
The deal comes one week after Japan's Suntory Holdings agreed to buy Beam Inc for $13.6 billion, with the transactions underscoring rapid consolidation in the global liquor industry.
Carlsberg, Heineken NV and SABMiller Plc have also struck deals in Asia over the past five years, lured by the region's $258 billion market that is growing twice as fast as the rest of the world.
Leuven, Belgium-based AB InBev sold Oriental Brewery in 2009 for $1.8 billion to KKR, as part of its efforts to ease the debt burden incurred in the $52 billion acquisition of US beer maker Anheuser-Busch by InBev a year earlier. KKR agreed to pay around $800 million in cash for OB and the rest in debt, later splitting the cash portion with Affinity roughly in half.
AB InBev has a small presence in Asia-Pacific region, with the region accounting for 14.3 percent of the 403 million hectoliters of beer it sold and 2.5 percent of its $15.5 billion in earnings before interest, taxes, depreciation and amortization in 2012.
