KKR & Co is buying Anheuser-Busch InBev NV’s (AB InBev) South Korean beer unit, Oriental Brewery, for US$1.8 billion, two people with knowledge of the matter said.
AB InBev, formed in a US$52 billion merger last year, and KKR planned to announce the deal yesterday, the people said, declining to be identified because they weren’t authorized to discuss it publicly.
The Belgian brewer InBev is seeking to sell US$7 billion in assets to help repay US$45 billion in loans taken to fund last year’s acquisition of Anheuser-Busch Cos. Volume sales at Oriental Brewery outpaced the local market last year as it took market share from domestic rival Hite Brewery Co, AB InBev said.
MoneyToday, a South Korean Internet news provider, reported the deal earlier, citing a person it didn’t identify.
KKR, founded in 1976 by Henry Kravis and George Roberts, has been involved in some of the biggest leveraged buyouts, including the record-setting US$43 billion takeover of TXU Corp in 2007. Such buyouts have dwindled since the collapse of the credit markets almost two years ago.
Announced private-equity deals dropped more than 60 percent to US$211 billion last year, data compiled by Bloomberg showed. Buyout firms including KKR that bought a record US$1.2 trillion in companies in 2006 and 2007 are now struggling to sell what they already own.
KKR has countered the slump by looking beyond leveraged buyouts to provide mezzanine loans, seek investments in infrastructure and expand its capital markets business.
AB InBev’s US$7 billion bridging loan has already been reduced by US$3.5 billion following a US$5 billion bond sale. The brewer also sold a 19.9 percent stake in China’s Tsingtao Brewery Co (青島啤酒) to Asahi Breweries Ltd for US$667 million.
The company has sold assets in China and the US and issued bonds to trim debt, and is considering selling “about five or six” businesses in total, chief executive officer Carlos Brito said at annual shareholders meeting last month.
Oriental Brewery’s beer sales by volume rose 6.1 percent last year, helped by growth of at least 10 percent in its Cass brand, Anheuser-Busch InBev said in its annual report for last year. That growth rate was more than double the South Korean market’s, the brewer said, helping it to win market share from Hite, the only other Korean producer.
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