Anheuser-Busch InBev not likely to sell packaging division, analysts say
Note: Lager Heads reported earlier today that A-B’s packaging group included a labeling operation. That was incorrect: The labeling group, Precision Printing and Packaging Inc., was actually sold earlier this year. Lager Heads regrets the error, but thanks alert reader “Raven” for the clarification.
There has been a lot of speculation recently that the newly-created Anheuser-Busch InBev will sell off Anheuser-Busch’s packaging operations to pay down debt from the $52 billion deal that created the world’s biggest brewer.
Now come several analysts who say that such a plan would be fraught with difficulty.
A little background: A-B’s Metal Container Corp. manufactures beverage cans and lids, selling them to the parent company and U.S. soft drink customers; it has about one-fourth of the U.S. aluminum beverage can market. Meanwhile, Anheuser-Busch Recycling Corp. buys and sells used aluminum beverage containers, and recycles aluminum and plastic containers. The packaging division also includes a glass manufacturing plant. Packaging contributed 10 percent of Anheuser-Busch’s net sales and 4 percent of profits last year.
Anheuser-Busch InBev wants to sell off non-core assets that won’t cause a lot of disruption when they are divested, said Collins Stewart analyst Rob Mann.
Thus, “we do not view the packaging division as a likely candidate (for sale), given the extent to which it is an advantaged low cost provider for A-B” in the United States, the London-based Mann wrote Nov. 25. “It seems reasonable to question the extent to which the asset is attractive to other parties, given that Budweiser is 60% of the business. In other words, it is a prime example of a business worth more to A-B than to an external party, which makes it a fundamentally bad idea to sell.”
Similarly, a team of analysts at UBS wrote last week that the packaging division “will be more challenging to sell at the moment.” Why? The unit is relatively integrated into the U.S. beer business, potential buyers in the industry have strained balance sheets, and a sale could trigger substantial capital gains taxes.
That still leaves Anheuser-Busch’s theme parks (including Busch Gardens and SeaWorld), as well as InBev’s beer businesses in Germany and South Korea, as the most likely candidates for sale, analysts said.
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Jeremiah McWilliams is a native Virginian who came to the Post-Dispatch in early 2007 to cover beer and other consumer products. He previously covered manufacturing for the Virginian-Pilot newspaper in Norfolk, Va. He is a graduate of Washington and Lee University. 
Then look for a sold sign on the packaging division tomorrow. If it makes “cents” not to sell then Brito will have it sold in a short period of time, didn’t make “cents” to pay 70 bucks a share for AB but he did anyway.
bantam weight you apparently don’t get it do you? The US dollar was (at the time of the offer) very undervalued compared to the Euro. So it was actually less expensive than it could have been had the US dollar been valued where it had been even a year ago. Also, InBev is getting a lot out of the deal.. majority in the US/North American beer market it didn’t have before, a top notch Marketing dept, an already streamlined and mostly modern brewery operation, and a brand name recognizable world wide. The Packaging division is profitable and contributes a cost savings to the breweries that might not be available if they sold it off.
The deal might have been good for A-B shareholders, but its way better for InBev. A-B didn’t get much out of the deal really.
Are you sure that the label printing operation is still part of Metal Container or was it sold to Spear?