Anheuser-Busch InBev NV kicked off the year’s biggest initial public offering (IPO), a sale of shares in its Asia-Pacific unit that could raise as much as US$9.8 billion and top Uber Technologies Inc’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 (US$5.13 to US$6.02) each, according to terms of the deal obtained yesterday by Bloomberg.
Trading is expected to start on July 19.
The price range represents a market capitalization of US$54 billion to US$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 would 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 1.7 percent yesterday morning in Brussels. They have gained 36 percent this year.
The market value is within previous expectations for US$40 billion to US$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 (蘇寧易購), 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.
AB InBev 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 range values Budweiser Brewing at 28.5 to 33.5 times consensus earnings for next year, according to terms of the deal obtained by Bloomberg.
The valuation is “reasonably punchy,” Societe Generale analyst Toby McCullagh wrote.
A sale at the top end could result in a 10 percent reduction of borrowings and help the company get net debt below a target of four times earnings one year earlier than planned, he added.
The IPO could give AB InBev more strategic flexibility to seek local partners.
Heineken has formed a partnership with China Resources Beer Holdings Co (華潤啤酒), challenging AB InBev’s position as the largest foreign brewer in the world’s biggest market.
The Asia-Pacific unit had net income of US$1.4 billion last year, up from US$1.1 billion a year earlier, a preliminary prospectus said.
AB InBev is still trying to reduce the debt it amassed through its purchase of SABMiller for more than US$100 billion.
AB InBev is scheduled to price the offering on Thursday next week.
JPMorgan Chase & Co and Morgan Stanley are joint sponsors for the Hong Kong share sale.
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