Anheuser-Busch InBev NV kicked off the year's biggest initial public offering, a sale of shares in its Asia Pacific unit that could raise as much as $9.8 billion and top Uber's May listing.
The Hong Kong IPO consists of 1.63 billion shares of Budweiser Brewing Company APAC Ltd offered at HK$40 to HK$47 each, according to terms of the deal obtained by Bloomberg Tuesday. Trading is expected to start on July 19th.
The price range represents a market capitalisation of $54 billion to $64 billion for Budweiser Brewing. At the top end, the Asian unit would be worth about as much as Heineken NV, the world's second-largest brewer. The listing will enable acquisitions by creating a "local champion" and will help AB InBev reduce its debt, chief financial officer Felipe Dutra has said.
AB InBev shares rose 0.5 per cent Tuesday morning in Brussels. They have gained 36 per this year. The market value is within previous expectations for $40 billion to $70 billion.
The brewer is among multinational companies that are reviewing their business strategies in Asia amid fierce competition from local rivals. French hypermarket operator Carrefour SA has agreed to sell a controlling stake to China's Suning.com Co, while German food retailer Metro AG has put its China operations up for bidding.
The Belgian brewer is counting on the region’s growth potential to draw interest in the shares as the beer business faces stagnating prospects elsewhere. The company has already cornered the premium market in China and has been buying up local craft beer brands to reach fashionable millennials with a taste for more expensive brews.
The IPO could give AB InBev more strategic flexibility to seek local partners. Heineken has formed a partnership with China Resources Beer Holdings Co., challenging AB InBev’s position as the largest foreign brewer in the world’s biggest market.
The Asia-Pacific unit had net income of $1.4 billion in 2018, up from $1.1 billion a year earlier, according to a preliminary prospectus.
AB InBev is still trying to reduce the debt it amassed through its purchase of SABMiller for more than $100 billion. S&P Global Ratings said in March it may cut its credit rating after Moody's Investors Service downgraded AB InBev one level late last year.
AB InBev is scheduled to price the offering on July 11.
JPMorgan Chase and Co. and Morgan Stanley are joint sponsors for the Hong Kong share sale. – Bloomberg
