Heard on the Street: This year’s biggest initial public offering doesn’t come cheap, but it offers a surprisingly premium taste
By Jacky Wong July 3, 2019 7:26 am ET This year’s biggest initial public offering doesn’t come cheap, but it offers a surprisingly premium taste.
Anheuser-Busch InBev will still own an 85% stake in the new entity after the IPO, but the deal will raise some cash, lowering the parent’s leverage slightly. Having a separately listed vehicle could also make acquisitions in the region easier. Budweiser Brewing Co. APAC, the Asia-Pacific unit of Anheuser-Busch InBev, is aiming to raise as much as $9.8 billion in a Hong Kong IPO . Photo: Richard B. Levine/Zuma Press Budweiser Brewing has been doing very well in China, the world’s largest beer market in terms of volume sold. It is the third-largest brewer in the country by the same measure, but it makes far more money than its rivals due to its focus on the premium segment.
Acquisitions, particularly in Southeast Asia, could be another possible source of growth. Freed from the growth problems of the Budweiser brand in the U.S., Budweiser Brewing likely will get a higher multiple than its parent company. If priced at the high end of the IPO range, the Asian unit will have an enterprise value equal to 24 times its trailing Ebitda, according to Bernstein, versus 13 times for its parent. This will make the newly minted stock a valuable currency for acquisitions.
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