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Analyst: Anheuser Busch Isn't Done With Shedding Assets

Jayson Derrick

Anheuser Busch Inbev NV (NYSE: BUD) sold its Australian beer assets to Japan's Asahi Group Holdings for $11.3 billion in enterprise value. According to one analyst, the parent company of Budweiser has other assets lined up for sale.

What Happened

Proceeds from the sale of AB InBev's Australian business named Carlton & United Breweries will be used to pay down the debt load which topped $100 billion at the end of 2018, according to CNBC. The sale follows a last-minute cancellation of a planned IPO of AB InBev's Asian business, which would have included the Australian assets.

The sale of the Australian assets is expected to close by the first quarter of 2020 and raises again the prospect of a new IPO of the Asian business. Bernstein commented before the asset sale divesting the Australian business would remove exposure to slower growth markets in the region.

Why It's Important

AB InBev's remaining business will be more skewed to high-growth markets like China, Bernstein's Euan Mcleish told CNBC. This would generate a superior valuation for the remaining company in a potential IPO.

The asset sale helped lift AB InBev's stock higher by more than 5.5% Friday.

AB InBev's net debt to core profit EBITDA ratio stood at 4.5 times before the start of 2019 and the company guided to lowering the metric below four times EBITDA by the end of 2020, CNBC wrote. Over the longer-term the company wants to target a multiple of two times EBITDA.

To achieve the financial metrics, the company may have a few other assets lined up for sale, including South Korea and Central American units, according to The Wall Street Journal.

Related Links:

IPO Expert On AB InBev's Canceled Go-Public Plan: It Wasn't Clear From Day One

Guggenheim Bullish On Budweiser Parent Company's Growth Opportunities

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