Is Anheuser-Busch InBev’s sale of Korean brewery hitting a snag?
Reuters is reporting here that the sale of Anheuser-Busch InBev’s South Korean beer business “appears to be losing its fizz,” as buyers balk at the $2 billion price tag and the world’s biggest brewer signals it’s in no rush to sell.
Anheuser-Busch InBev’s auction of Oriental Brewery, which first hit the headlines months ago, “had been expected to attract a host of bidders, eager to tap around 40 percent of a big Asian beer market,” according to the story, which we quote here:
But ever since AB Inbev launched the deal a few months ago, several hurdles have appeared, including South Korea’s deteriorating economy and weakening currency. …
Another key development was the success of AB InBev’s $5 billion bond offering in January. Those proceeds took pressure off the company from having to quickly sell off assets to pay a $7 billion loan due in November.
Reuters says that Anheuser-Busch InBev is proceeding with the auction of its Korean assets despite the cushion from the debt sale. One major stumbling block: determining what Oriental Brewery is worth. While the company has a strong business, some analysts believe it is not worth the $2 billion A-B InBev is reportedly seeking.
For example, Reuters says, London-listed SABMiller, the world’s No. 2 brewer, is interested in Oriental Brewery. But its valuation of the business is around half of what A-B InBev was hoping to get.
Anheuser-Busch InBev said recently that it is still committed to divesting $7 billion of non-core assets, saying it could be reached with two to three sales from a list of five to six businesses. The company is careful not to give off a wiff of haste. The company’s chief financial officer said that the divestitures are not “a fire sale.”
Okay…so what is going to give way first? Will A-B InBev sell at a lower price than it truly wants in order to get a chunk of cash and pay down debt? Or will the company hold out until currency fluctuations and economic growth look more favorable? Or will it find a buyer willing to pony up full price? Enquiring Lager Heads want to know.
(1 votes, average: 5 out of 5)
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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. 
Off topic here but wanted to give a ’shoutout’ to all the spineless consulting firms here in St. Louis. If you guys would have had a backbone and said ‘NO’ to the 120 day payment terms then maybe, just maybe, InBev wouldn’t have requested the 10 percent cut in billing rates that you readily agreed to and are now forcing down your consultants’ throats. Even if InBev had still come back and asked for the rate cut you could have said ‘NO’ to that also. While you are bending over backwards for InBev you are telling your consultants to … uhh … well … just bend over. Why any of you would ever want to place another consultant there is beyond me.
Here is an industry that just said ‘NO’ and according to the article “The brewer has yet to respond to the opposition”.
http://www.mediaweek.com/mw/content_display/news/national-broadcast/e3i801548f98188f77a665546fe1befe8fa
I don’t see them lowering their price unless it comes down to them NEEDING the money. I wouldn’t sell any property of mine at a value I didn’t agree with if I didn’t need to. So, if they end up at a point in time where they have another loan due and they need the cash to pay it, that’s when they might drop the price.
And, also off topic…. imhappy4u, ABI can do whatever they want to contractors, because in this economy, and with the current job market, people can’t risk losing their job. You can’t say “NO” to a job when you’ve got a mortgage and family to feed. These are the strong arm tactics that led to the creation of Unions. Contractors sign on the dotted line, though, so they have no recourse and no right to form a Union. If they all walked, there would be twice as many standing in line to take their place at whatever rate ABI decided to pay. I was at Schnucks the other day, and there were 20 people in line turning in applications for a few part time positions.
I would’nt buy from Brito either the little dictator needs his attitude adjusted toward the American people, Sorry to hear Tim Armstrong maybe leaving or has gone, really the nicest guy around the former greatest company in St Louis
The staff keeps churning at AB-IB. In the last 2 weeks there have been 4 Director level IT people depart from the company (at least they were Directors or Sr. Directors before the take-over). There have also been several other employee departures that simply do not even get announced. Many, many people are looking for new jobs at a different employer.
There are rumors floating around that there will be some kind of layoff today (another Friday the 13th) - no one seems to know any details (where, how many, etc.). I guess we all will have to wait through the suspense and see what happens. Is there any question why morale is so low?
Imhappy4u: Thanks for the link. That article made me laugh, which was a temporary break from the soul-crushing despair of this horrible place. And you’re right about the staffing firms being spineless and bending over backwards. I’m currently hoping they will be willing to negotiate my huge rate cut or that I can magically find another job before April 1st. If not, I will be stuck working for well below market value with no vacation time to use to interview. Interestingly, my company seems to actually have a little backbone in trying to force me to accept a greater percentage of the losses than they’re willing to pay. What is it they say about bullying? Oh yeah, it runs downhill…