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Report: AB InBev in talks for possible IPO of Asian business

Anheuser-Busch InBev SA is in talks with advisers as it mulls an IPO of its Asian operations as a means to reduce debt, Bloomberg News reported Jan. 11, citing people familiar with the matter.

The world's largest brewer has been exploring ways to pay down its debt, the report said, noting that investors have been questioning the company's strategy as it reported a sharp drop in its third-quarter profit. The AB InBev missed expectations in the third quarter and halved its dividend.

AB InBev's shares spiked in the biggest rise since 2015 after people with knowledge of the matter revealed the possibility of an IPO, the report said.

The brewer may seek to value its Asian business at about $70 billion, though the eventual figure would depend on market demand and growth prospects, the report said, citing sources. AB InBev may even opt out of the sale, the sources said.

Jefferies Financial Group Inc. analyst Edward Mundy said an IPO will help AB InBev boost its deleveraging process and allow flexibility for deals including a potential buyout of Castel Group, the report said. Mundy, however, noted that a $70 billion valuation would be "quite rich" and that a valuation 20x its earnings would more reasonable.

A potential adviser on the IPO estimated a valuation in the range of $40 billion to $50 billion, Bloomberg News said.

An AB InBev representative in an emailed statement to S&P Global Market Intelligence said the company does not comment on rumors. "We are always looking at opportunities to optimize our business and drive long-term growth, of course subject to our strict financial discipline. We are committed to our businesses in the Asia Pacific region and excited about the potential in this geography."

Asia-Pacific contributed $2.3 billion of AB InBev's revenue in the quarter ended Sept. 30, 2018, accounting for 17% of global sales, Bloomberg News reported, adding that the region has been a key battleground for international brewers as consumption of mass-market lager slows in North America and Europe.