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AB-InBev to sell brewer to reduce debt
Source: Agencies |
May 8, 2009, Friday
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BREWER Anheuser Busch-InBev said yesterday that it will raise US$1.8 billion by selling South Korea's Oriental Brewery, the country's second largest, to private equity group Kohlberg Kravis Roberts & Co LP to cut down on its huge debt burden.
The owner of Budweiser is trying to sell off units to help pay off the loans that funded InBev's US$52-billion takeover of Anheuser-Busch that formed the company.
AB-InBev also said it posted a profit of US$716 million for the first three months of the year, which it said it could not compare to the US$373 million InBev reported alone last year before taking over Anheuser-Busch.
Posting a 7-percent drop in sales to US$8.19 billion in the first quarter, the company said the business environment was "challenging" and it would continue a cutback program.
Sales were US$8.85 billion for the two companies a year ago.
Beer-making costs are rising, it warned, describing sales as flat or declining in wealthy nations badly hit by a global recession that has curbed customer spending.
But beer is "a resilient business, even in downturns," AB-InBev chief financial officer Felipe Dutra said.
"During downturns what we usually see is a combination of people trading down from wine and spirits into beer, people shifting channels from on-premise into off-premise, staying more at home," he said.
The company said it would focus on high-margin key brands - Budweiser and Stella Artois - although the emphasis on premium over lower-price beer has cost it sales in Russia and eastern Europe.
"We see weaker volumes overall in western Europe ... but we were able to gain market share across ... UK, Germany and Belgium," Dutra said.
AB-InBev said the Oriental Brewery deal should close by the third quarter and KKR had already obtained financing. It expects to post a one-off gain of US$500 million from the sale.
The owner of Budweiser is trying to sell off units to help pay off the loans that funded InBev's US$52-billion takeover of Anheuser-Busch that formed the company.
AB-InBev also said it posted a profit of US$716 million for the first three months of the year, which it said it could not compare to the US$373 million InBev reported alone last year before taking over Anheuser-Busch.
Posting a 7-percent drop in sales to US$8.19 billion in the first quarter, the company said the business environment was "challenging" and it would continue a cutback program.
Sales were US$8.85 billion for the two companies a year ago.
Beer-making costs are rising, it warned, describing sales as flat or declining in wealthy nations badly hit by a global recession that has curbed customer spending.
But beer is "a resilient business, even in downturns," AB-InBev chief financial officer Felipe Dutra said.
"During downturns what we usually see is a combination of people trading down from wine and spirits into beer, people shifting channels from on-premise into off-premise, staying more at home," he said.
The company said it would focus on high-margin key brands - Budweiser and Stella Artois - although the emphasis on premium over lower-price beer has cost it sales in Russia and eastern Europe.
"We see weaker volumes overall in western Europe ... but we were able to gain market share across ... UK, Germany and Belgium," Dutra said.
AB-InBev said the Oriental Brewery deal should close by the third quarter and KKR had already obtained financing. It expects to post a one-off gain of US$500 million from the sale.
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