|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||78.30 - 79.04|
|52 Week Range||56.32 - 91.14|
|Beta (3Y Monthly)||1.39|
|PE Ratio (TTM)||22.89|
|Forward Dividend & Yield||2.00 (2.55%)|
|1y Target Est||N/A|
Jul.15 -- Ringo Choi, IPO leader at EY Asia Pacific, discusses the IPO market in Asia, how the listing failure of AB InBev will impact future offerings and Alibaba’s upcoming IPO. He speaks on “Bloomberg Markets: China Open.”
Soon after reports surfaced that Corona and Budweiser parent Anheuser-Busch InBev was delaying its hotly anticipated Hong Kong IPO, the company abandoned those plans entirely. Yahoo Finance's Jennifer Rogers, Myles Udland, and Editor-at-Large Brian Sozzi discuss the latest.
St. Louis companies continue to be buyers in the mergers and acquisitions market. Of 98 transactions in the first half of 2019, 61 were acquisitions by St. Louis companies, and 37 were sales by St. Louis companies, according to The Fortune Group, an M&A advisory firm. It’s a trend that goes back 10 years and is in contrast to the negative trend – and image – of large public companies headquartered in St. Louis relocating or selling to companies with headquarters elsewhere.
A senior Goldman Sachs banker has highlighted to colleagues the role played by rival Morgan Stanley in failed Hong Kong IPOs following the collapse on Friday of Budweiser APAC's $9.8 billion initial public offering, according to an internal email seen by Reuters. On Friday AB InBev called off the Hong Kong listing of its Asia Pacific brewing business, that was being managed by Morgan Stanley and JPMorgan, citing several factors, including prevailing market conditions. A further 11 banks were listed as global coordinators and bookrunners but Goldman had no role on the deal.
Budweiser's parent company was on track to hold the title of overseeing the world's most valuable IPO in 2019. The now-cancelled IPO was poised to raise $10 billion through a listing in the Hong Kong market. It appears the company and its bankers were too aggressive in pricing the IPO, although its exposure to China yields superior margins compared to rivals, The Wall Street Journal reported.
AB InBev's cancelled Asian stock market listing will slow but not derail the world's largest brewer's efforts to cut its debt mountain, delaying future acquisitions and prioritising its main challenge - selling more beers. The Belgium-based company on Friday shelved plans to list its Asian Pacific business in Hong Kong in what would have been the world's biggest initial public offering so far this year. The brewer has said that even without the flotation of a minority stake in the Asian division Budweiser APAC it will reduce its net debt to core earnings (EBITDA) ratio to below four times by the end of 2020 - from 4.6 at the end of 2018.
Guggenheim’s Laurent Grandet said that every other major catalyst is intact for AB InBev, making last week’s weakness a buying opportunity.
(Bloomberg) -- JPMorgan Chase & Co. and Morgan Stanley lost out on their cut of what would’ve been the year’s biggest initial public offering last week.The top two advisers on Anheuser-Busch InBev SA’s Asia Pacific unit IPO would’ve split up to $140 million to $170 million in fees, according to people with knowledge of the matter. The world’s biggest brewer intended to raise as much as $9.8 billion before it announced Friday that it wouldn’t proceed with the listing citing “prevailing market conditions.”Click here to read more about the IPO’s failure.Advisers of Budweiser Brewing Company APAC Ltd. were slated to split about 2% of the funds raised in the IPO, said the people, who asked not to be identified because the information is private. Sponsors, or lead arrangers, would take home about 70% of the fee pool plus potential incentive payments, the people said.The banks’ reputations are taking a hit alongside their wallets as some analysts blame them for the IPO’s failure. Morgan Stanley has been ranked No. 1 for equity offerings in Asia Pacific since 2017, according to data compiled by Bloomberg. JPMorgan is eighth on equity deals in the region so far this year.“AB InBev and its bank consortium headed by JPMorgan and Morgan Stanley failed to properly price, attract cornerstone investors and drum up demand,” said Nikolaas Faes, an analyst at Bryan Garnier & Co., in a note to clients where he called the IPO a “fiasco.”Read more analyst comments on the IPO here.Representatives for AB InBev, JPMorgan and Morgan Stanley declined to comment.Budweiser had planned to seek $8.3 billion to $9.8 billion in the Hong Kong IPO, valuing the business at as much as $64 billion. It could’ve been the biggest IPO so far this year, taking advantage of the beer market’s growth in Asia to attract investors, and surpassing Silicon Valley darling Uber Technologies Inc.’s May share sale.\--With assistance from Albertina Torsoli.To contact the reporters on this story: Crystal Tse in Hong Kong at email@example.com;Vinicy Chan in Hong Kong at firstname.lastname@example.orgTo contact the editors responsible for this story: Fion Li at email@example.com, Amy ThomsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- For a company that built its beer-brewing empire on the back of swashbuckling deals, the future for Anheuser-Busch InBev SA looks pretty unexciting.Friday’s decision by the Belgian giant to pull an initial public offering of its Asian unit, which might have raised as much as $10 billion, means it has given up the chance to pay down its $100 billion of debt faster. Perhaps more important, the brewer has lost a valuable source of funding for acquisitions in Asia.AB InBev had set a punchy price range for the listing, as noted by my colleague Chris Hughes. Even so, the decision to pull the IPO – rather than cut the price – is curious. A survey by Bernstein analysts indicated that there was significant interest among investors at HK$38 per share, which was below the HK$40-47 range but not that much lower. This reduced offer would have generated $400 million less than an IPO at the bottom of the price range, Bernstein notes. For the world’s biggest brewer, with a market capitalization of 157 billion euros ($177 billion), that would have seemed a small concession given the IPO’s considerable benefits.Without the prospect of the Asia listing, AB InBev has little choice but to knuckle down and gradually chip away at its mountain of borrowings. Net debt stood at $103 billion on December 31. The IPO would have cut the total by about 10%, according to Bernstein, and allowed the company to hit a key debt reduction target a year early. Now net debt will still be 4.2 times earnings at the end of this year. That’s better than the 4.6 times at the close of 2018, but it’s still too high. It underlines the slow pace of reducing the burden.This doesn’t leave the group much flexibility to do deals. True, the company could gear up further or use AB InBev shares as currency. But neither option is attractive. Investors would be justifiably nervous about borrowings rising even more. The group’s two biggest shareholders, Altria Group Inc. and Colombia’s Santo Domingo family, may not want to be diluted through any deal that was funded by equity.Cutting the dividend again to speed deleveraging is another option. The group should probably have gone further when it halved the payout in October. Still, such a decision wouldn’t be taken lightly.While it’s possible the IPO might return to the agenda, it’s hard to see what might change either the company’s or investors’ contrasting views of the Asian business’s value. With the prospects of the listing gone – at least for now – the king of beers is tasting pretty flat.To contact the author of this story: Andrea Felsted at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- For months, executives from Anheuser-Busch InBev NV raced to prepare for a listing of its Asian subsidiary, Budweiser Brewing Company APAC Ltd. It was to be this year’s biggest initial public offering and would surpass Uber Technologies Inc.’s $8.1 billion share sale.The hope had been that the Belgian company’s leading position in the premium beer market in China -- with its millions of drinkers -- would justify a target to raise as much as $9.8 billion, for a valuation of $64 billion. But on Friday, AB InBev discovered that wasn’t enough to convince investors to splurge on the King of Beers, forcing it to dial back its ambitions and shelve plans for the mammoth IPO in Hong Kong.AB InBev’s setback can be explained at least partly by shifting trends in China, where younger consumers are increasingly moving away from traditional beers toward higher-priced craft brews and cocktails. Meanwhile, competition in China is spiking after rival Heineken NV forged a blockbuster deal with a state-owned company. All that left many investors wary of buying into Budweiser’s richly valued IPO.“We do feel that there are better places to be invested within beer, such as Carlsberg or Heineken,” Jefferies International analyst Ed Mundy told Bloomberg Television on July 12 before the company announced the suspension of the listing. Jefferies had estimated a valuation of closer to $45 billion.AB InBev shares fell as much as 2.8% early Monday in Brussels. The stock has lost more than 12% over the past 12 months.In its statement Friday, the company said it wasn’t proceeding with the transaction partly due to “prevailing market conditions.” The company may explore options such as selling a minority stake in the Asian business, though there is no immediate plan for a deal, people familiar with the matter said. AB InBev declined to comment.Bold MoveFrom the beginning, investment banks appeared to be overly emboldened by the promise of Asia’s beer boom. Shortly after AB InBev requested proposals last Christmas, one adviser pitched a valuation of $70 billion to $80 billion, according to people familiar with the matter.Seeing the S&P 500 headed for a record high and the success of some IPOs in the U.S., the company and its lead bankers at JPMorgan Chase & Co. and Morgan Stanley decided to offer a bigger stake in the business and try to raise $8 billion to $10 billion, the people said. That’s up from earlier discussions about targeting $5 billion to $6 billion.In the run-up to the pricing of the IPO last week, it became clear that demand from institutional funds didn’t meet the company’s expectations, the people said.AB InBev then guided investors that it could price the sale at the low end of the marketed range of HK$40 to HK$47 a share. Hours before the announcement Friday afternoon in the U.S., advisers had considered cutting the IPO’s size and relaunching the offer in a bid to rescue the deal.However, with several funds pushing to lower the price and threatening to pull orders at the last minute, AB InBev had no choice but to suspend the IPO, the people said.Representatives for JPMorgan and Morgan Stanley declined to comment.Read: AB InBev’s Pricey Brew Was Too Rich for Investors: Nisha GopalanCutting DebtProceeds from the listing would have allowed Chief Executive Officer Carlos Brito to pay down part of AB InBev’s colossal borrowings. The brewer that owns Budweiser as well as Corona, Stella Artois and other brands is wrestling with more than $100 billion in debt, the majority of it taken on to finance its takeover of rival SABMiller Plc in 2016. Now Brito has to find other ways to manage that debt load.Read: AB InBev Seeks Plan B After Investors Bail on Year’s Biggest IPOThe CEO must also contend with rising pressures in the Chinese market, one of the brewer’s most important countries and one that is key for growth in Asia. Beer accounted for about 30% of China’s total alcohol sales in 2015 but Euromonitor expects that to fall below 26% by 2023.While AB InBev commands 43% of the premium market in China, that’s down from 47% in 2014, according to Euromonitor. At the same time, rival Carlsberg A/S increased its share from 9% to 14%.Carlsberg has moved into 32 Chinese cities over the years and it plans to add five more during 2019, according to Graham Fewkes, the company’s executive vice president for Asia.The brewer also markets Tuborg and super premium brands Grimbergen and 1664 Blanc in China. “Growth is going to come from selling higher price products to people that are a bit more curious about the beer they are drinking,” Fewkes said.Heineken in April completed a $3.1 billion investment in the parent of China Resources Beer Holdings Co., China’s top brewer, and is licensing its brand to the state-backed company on a long-term basis. That deal gave the Dutch company access to an enormous distribution network in urban and rural segments of the country, and it reported shipments grew more than 10% in China in the first quarter of the year.To counter a decline in its bigger volume brands, AB InBev has sought a foothold in the craft-beer market through the acquisition of Boxing Cat Brewery. Still, there are clear signs that competitors are chipping away at AB InBev’s dominance in the country’s pricier bars and restaurants.Zhou Xinyu, a 21-year-old student in Shanghai, likes to drink beer from Tokyo-based Asahi Group Holdings Ltd. with sushi. She ranks Budweiser behind Heineken and beer from China’s Tsingtao Brewery Co. Ltd. “Budweiser is the bitterest of the three,” she said.(Updates with share price.)\--With assistance from Manuel Baigorri, Jin Ye, Dinesh Nair and Ben Scent.To contact the reporters on this story: Thomas Buckley in London at firstname.lastname@example.org;Vinicy Chan in Hong Kong at email@example.com;Crystal Tse in Hong Kong at firstname.lastname@example.org;Bruce Einhorn in Hong Kong at email@example.comTo contact the editors responsible for this story: Rachel Chang at firstname.lastname@example.org, ;Eric Pfanner at email@example.com, ;Fion Li at firstname.lastname@example.org, Anjali Cordeiro, Kenneth WongFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
European stocks ended higher on Monday as trade-sensitive German equities took heart from surprisingly strong Chinese data after worries about domestic growth led to a shaky start. Frankfurt-listed shares had briefly dipped into the red in early trade after Germany's economy ministry pointed to weakness in the manufacturing and services sectors, suggesting a subdued second quarter for Europe's largest economy. The DAX index ended 0.52% higher, however, with investors counting on the European Central Bank to signal further easing of monetary policy at a meeting next week given slowing growth.
Home Credit, a consumer finance lender that counts China as its biggest market, plans to file an initial public offering in Hong Kong later this year, in what could be a potential test of investor appetite in the city's markets, according to a securities filing.The filing on Monday comes two days after brewing giant Anheuser-Busch InBev scrapped plans for an offering of its Asian operations in Hong Kong, citing "prevailing market conditions". The offering, which AB InBev hoped would raise as much as US$9.8 billion, would have been the largest IPO in the world this year.Home Credit, which is based in Prague, did not disclose the size of the offering in a filing on the Hong Kong Exchanges and Clearing (HKEX) website on Monday. Anheuser-Busch scraps its US$9.8 billion IPO for Budweiser in Hong KongTwo people familiar with the offering said the company was targeting raising US$1 billion (HK$7.85 billion), which would make it one of the biggest IPOs of the year in Hong Kong.A Home Credit spokesperson declined to comment.Established in 1997, Home Credit is focused on consumer lending in nine emerging markets in Europe and Asia, including China, India, the Philippines and Russia.The company offers point-of-sales loans in shops, often for consumer goods such as televisions. It also offers cash loans and revolving loan products, such as credit cards.Many of its customers took out the first loan of their lifetime via Home Credit. Hong Kong behind NYSE, Nasdaq in IPO rankings in first half"Advanced data analytics, artificial intelligence and other disruptive technologies are embedded in every step of our customer experience, from application, to approval, to customer management and cross-selling as well as in the collections process," the company said in the filing. "Leveraging our decision-making platform and advanced data analysis technologies, we have reduced the median time to decision to under 30 seconds in the three months ended 31 March 2019 while providing a seamless, simple and mostly paperless application process for our customers."The company first entered the Chinese market in 2007, according to its website.The company is 100 per cent owned by Home Credit Group BV, which is a subsidiary of PPF Financial Holdings.Citigroup, HSBC and Morgan Stanley are acting as joint sponsors on the offering.The largest IPO so far this year in Hong Kong was the listing of China's oldest brokerage Shenwan Hongyuan, which raised US$1.2 billion, according to data provider Refinitiv.The decision by Home Credit to seek an IPO in Hong Kong comes at an uncertain time in the city.The city has seen weeks of protests, including violent clashes with police and the sacking of the Legislative Council building, over a controversial extradition bill that has since been withdrawn. The bill would have made it easier to send people from Hong Kong to mainland China for trial.The city's economy has also been hit by a year-long trade war between the US and China that has weighed on growth.Logistics real estate developer ESR Cayman postponed its IPO in Hong Kong last month, citing "current market conditions".This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
HONG KONG/NEW YORK/BRUSSELS, July 15 (Reuters) - Scepticism over AB InBev's high valuations doomed Budweiser APAC's IPO of up to $9.8 billion - poised to be the world's biggest this year - investors and bankers said, putting would-be floats on notice that careful pricing remains key to success. Anheuser Busch InBev NV (AB InBev), the world's largest brewer, dramatically shelved the initial public offering (IPO) of its Asian business on Friday, citing market conditions among other factors.
(Bloomberg) -- Anheuser-Busch InBev NV shares fell after the demise of a blockbuster initial public offering of the brewer’s Asian business, leaving the company in a bind.After reversing course on Friday over plans to sell a stake in the unit to raise as much as $9.8 billion, the Budweiser owner needs to find a new way to reduce its $100 billion-plus debt pile and mollify shareholders, while reinvigorating a business that’s lost its fizz and keeping credit-rating agencies at bay. Standard & Poor’s has a negative outlook on AB InBev’s debt, which it ranks A-, the fourth-lowest investment grade.“Any missteps in debt reduction due to reduced profitability could lead to further downgrades,” Bloomberg Intelligence analysts Hoai Ngo and Madeleine Hart wrote in a note.After the planned Hong Kong sale was pulled, the shares fell as much as 2.8% in Brussels early on Monday. The company’s euro bonds also declined.Read: AB InBev’s Asia Setback Delays Its Next Big Deal: Street WrapHere are a few options the company could pursue next.Cut CostsAB InBev was built over three decades via acquisitions, followed by cost cuts, as scores of beer brands around the globe were brought under the same roof. By eliminating overlapping functions it has become the most profitable major brewer in the world, with operating margins more than double those of its nearest rival, Heineken NV.The downside of further operational efficiencies is that AB InBev has been trying to show a friendlier face since the financial meltdown at Kraft Heinz Co., a company that shares board members with the brewer. Investors might wonder about the pace of growth if AB InBev takes a knife to marketing and other outlays in a bid to cut its debt, while refraining from acquisitions.“What the cancellation of the IPO means is that probably it will take modestly longer for ABI to expand in the three countries it wants to grow in -- the Philippines, Thailand and Vietnam,” said Nico von Stackelberg, an analyst at Liberum, though he added that “it’s only a matter of time before they get there.”Revisit an IPOThe company could sit tight for a while and then return at a later date and launch a new listing campaign.The downside is that potential investors now have the upper hand, given that the company has tried once and failed to find enough buyers. That could make pricing tough the second time around.The company may also explore selling a minority stake in the Asian business, Budweiser Brewing Company APAC Ltd., though there is no immediate plan for a deal, people familiar with the matter said.Sell AssetsAB InBev’s dealmaking culminated in the “megabrew” combination with SABMiller three years ago. To secure antitrust approval, the company had to sell a number of assets, including Peroni, Grolsch and Pilsner Urquell in Europe and its stake in MillerCoors in the U.S.The company still owns more than 60 beers worldwide, ranging from household names like Budweiser, Corona and Stella Artois to local labels like Boxing Cat in China and Brahma in Brazil. As Japan’s Asahi Group Holdings Ltd. expands its presence in Europe and Heineken and Carlsberg A/S push further into Asia, more brands could change hands.The downside is that AB InBev’s business is built on scale and back-office efficiencies. Paring back could undermine that model. And few beer brands fetch top dollar these days, limiting the appeal of any sales.Cut the Dividend AgainAB InBev could seek to reduce payouts to investors as it prioritizes the management of its debt load over maintaining its reputation as one of the most shareholder-friendly companies in the consumer-goods industry.The brewer has the cash, and there’s a precedent, after AB InBev cut its dividend by half in October, earmarking the $4 billion saved to pay down its loans.The downside is that last year’s move prompted an 11% plunge in the share price, destroying $18 billion in market value. It was intended to be a painful one-time exercise -- not the first in a series.(Updates with shares in first, fourth paragraphs.)\--With assistance from Albertina Torsoli, Manuel Baigorri, Crystal Tse, Vinicy Chan and Tasos Vossos.To contact the reporters on this story: Eric Pfanner in London at email@example.com;Thomas Buckley in London at firstname.lastname@example.orgTo contact the editor responsible for this story: Eric Pfanner at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Dream Big is the mantra of Anheuser-Busch InBev. The world’s biggest brewer accounts for nearly one in four beers sold worldwide and nearly half the industry’s profits. The sale of a minority stake in its Asian business would have been the largest initial public offering of the year.
In trying to sell a stake in its Asian business, Anheuser-Busch InBev was pitching a premium brewer with fast-growing prospects that deserved a correspondingly frothy price. What Hong Kong investors found in Budweiser APAC — which markets dozens of brands including Budweiser and Stella Artois in countries ranging from China to Australia — was a standard, slightly flat beer group. of what would have been the world’s biggest initial public offering this year, leaving the heavily indebted parent to blame “prevailing market conditions” for the deal’s failure.
Anheuser-Busch InBev shares extended declines Monday after the world's biggest brewing company shelved plans to list its Asia business on the Hong Kong market in what would have topped Uber Technologies for the biggest IPO of the year.
(Bloomberg Opinion) -- Anheuser-Busch InBev NV blamed market conditions for its decision to pull what would have been the world’s biggest initial public offering this year. Yet the brewer should take at least some responsibility. This concoction was far too frothy for investors when Asian economies face an array of sobering realities.AB InBev said it will no longer proceed with the IPO of its Asia-Pacific business, Budweiser Brewing Company APAC Ltd., which had been aiming to raise as much as $9.8 billion in Hong Kong. The company’s American depositary receipts fell as much as 4.9% in New York before closing down 3% on Friday.The offering valued Budweiser Brewing between 15.5 times and 18.2 times earnings before interest, tax, depreciation and amortization – well above the multiples for Carlsberg A/S and Heineken NV, and a premium to shares of the parent. The price range of HK$40 to HK$47 ($5.11 to $6.01) a share would have resulted in a market capitalization of $54.2 billion to $63.7 billion.You can hardly blame investors for wanting to sit this one out. The U.S.-China trade war is at an impasse and the ripples are widening. Singapore, a bellwether for global trade, on Friday posted its sharpest growth decline since 2012. While the Federal Reserve has signaled that interest rate cuts are coming, which has buoyed U.S. stocks, that's also driving a wedge between the world’s biggest economy and the rest.This split is perhaps nowhere more apparent than the IPO market. Listings in the U.S. are on track for their best year since 2014. Hong Kong, the top destination last year, is languishing by comparison, after a series of high-profile bloopers including smartphone maker Xiaomi Corp. in July 2018 and food-delivery giant Meituan Dianping in September. As I’ve argued, reclaiming that crown will be an uphill battle; and now Hong Kong is facing competition from Shanghai for tech IPOs. Alibaba Group Holding Ltd.’s secondary listing plan is a ray of light – but this latest kerfuffle could dim any optimism.Against this dismal backdrop, it’s little wonder things went south. Yet it’s a mistake to overlook AB InBev’s own missteps. For one thing, the company marketed itself as a purveyor of high-end beer, taking cues from Chinese consumers’ growing taste for foreign brands and craft labels. Perhaps its price range doesn’t look so out of whack when you consider the country's brewers trade anywhere between 15 times and 21 times, according to Bloomberg data. Yet investors just weren't convinced that demand would hold up in a slowing economy. The company’s China pitch also ignored mature markets like South Korea and Australia, which make up around half of Budweiser Brewing’s Ebitda, according to Bernstein Research. Then there’s the fact that growing a brand in Asia's fragmented market is easier said than done. India, where whiskey is the traditional tipple of choice, and Southeast Asia could have been fertile ground for expansion. One argument for an Asia IPO was that Budweiser Brewing would benefit from local tie-ups. Would the Thai tycoon who owns Vietnam’s top brewer, Sabeco Trading Corp., or the magnate that controls the Philippines’ San Miguel Corp. really cede control to the Belgian brewer for a piece of the Hong Kong listing? I’m unconvinced.The fatal flaw, however, may have been AB InBev’s hubris. In deciding against a cornerstone investor tranche, the company eschewed a fixture of Hong Kong’s IPO market. It turns out investors really do like the comfort of big names that pledge to hold stock – even if the practice ties up a lot of liquidity. Had Budweiser’s listing succeeded, it would have been a win for market reform, too. With such a bubbly valuation, AB InBev may have thought its investors were wearing beer goggles. Whether the brewer can make a dent in that $103 billion net debt from its purchase of SABMiller looks a lot less certain after a cold shower and pot of black coffee.To contact the author of this story: Nisha Gopalan at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Anheuser-Busch InBev NV’s decision to scrap what was slated to be the year’s largest IPO is a bad sign for the pace of its debt reduction and future M&A, equity analysts said, with Macquarie calling it a “a meaningfully negative development.”The world’s biggest brewer said on Friday that it had decided not to proceed with an IPO of its Asia Pacific unit, citing market conditions. AB InBev’s U.S. depositary receipts fell 3% in U.S. trading on Friday afternoon. The Brussels-listed shares have gained 37% this year, with the prospect of the Asia unit IPO helping it to outperform peers including Heineken NV and Carlsberg A/S.Liberum said the move was “the right thing to do” if the desired valuation could not be achieved and noted that the plan could be revived if the environment improves. Still, analyst Nico von Stackelberg expects the shares to decline at the start of trading on Monday.Here’s what analysts had to say about the brewer’s change of plans.Macquarie, Caroline Levy(Neutral)“Meaningfully negative development,” though the decision may be reflective solely of market conditions rather than any issues with ABI’s Asian operationsNo Asia IPO, for now, means more debt for longer, as IPO had been expected to allow ABI to pay down ~$8b in debt, taking leverage from net debt/Ebitda of 4.6x to 3.7x by late 2019Achievement of ABI’s stated 2x debt/Ebitda target will now take an extra year“Cannot rule out another dividend cut”Cuts PT for U.S. stock to $87 from $93 and for the European shares to EU78 from EU83. BUD closed at $86.94 on Friday in the U.S. and the Brussels-listed shares at EU78.93 Bernstein, Trevor StirlingExpects shares to open at least 2% lower on Monday in BrusselsPulled IPO was “certainly unexpected;” unclear whether miscalculation was due to the bankers or due to management’s own expectations that investors would be willing to pay a significant premiumABI now won’t delever as much and as quickly as expected; if the IPO had gone ahead, they likely would have reached the target of 4x net debt/Ebitda by the end of 2019. Now they will meet that target by end of 2020M&A in Asia “is off the agenda short term”Liberum, Nico von Stackelberg(Buy)It will now take the brewer “modestly longer” to expand in the three countries it wants to grow in, the Philippines, Thailand and Vietnam. Still, AB InBev will get there and will continue getting biggerSays Belgian shares are likely to open lower Monday due to the phasing of deleveraging and arguably higher cost of equity“It’s not as if AB InBev won’t keep churning out cash, so I am not worried that they won’t be able to meet their 2020 debt-reduction target, which wasn’t contingent on the Asia IPO”Delayed IPO “also may mean that the large transaction that is likely to happen one day, the acquisition of Castel, will take a touch longer”AlphaValue, Laura Parisot(Add)“The signal is pretty bad as the goal with this IPO was deleveraging;” the net debt/Ebitda target should not be reached and it may be a problem for evaluations of debt agenciesThe company had announced that there could have been potential Asian acquisitions following the IPO. Asia remains very competitive for the group, so it was a really good strategy but it is likely not possible nowABI should now focus on cash to control its debtNOTE: Chief Executive Officer Carlos Alves de Brito said on a call in February that he remains committed to deleveraging AB InBev to around 2x net debt/Ebitda. He said the measure was 4.6x at the end of 2018(Updates with Bernstein comments.)To contact the reporter on this story: Albertina Torsoli in Geneva at firstname.lastname@example.orgTo contact the editors responsible for this story: Celeste Perri at email@example.com, Beth MellorFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Anheuser-Busch InBev has scrapped what could have been the largest global initial public offering (IPO) of 2019 in Hong Kong, in a setback to the city's plan to catch up with New York as the world's fundraising hub."The company is not proceeding with this transaction due to several factors, including the prevailing market conditions," Anheuser-Busch said in its announcement to scupper its US$9.8 billion IPO. "The company will closely monitor market conditions, as it continuously evaluates its options to enhance shareholder value, optimise the business and drive long-term growth, subject to strict financial discipline."The decision came after the unit Budweiser Brewing Company APAC failed yesterday to price its IPO, which was expected to be offered at the lower end of a range of between HK$40 and HK$47 per share, according to a person familiar with the IPO, and a fund manager briefed by bookrunners of the deal.According to its financing schedule, Anheuser-Busch had to price its Budweiser stock by Monday, for the shares to debut on July 19 in Hong Kong. Depending on the final pricing, Budweiser is potentially raising US$8.3 billion to US$9.8 billion from the listing, surpassing Uber, which raised US$8.1 billion in New York in May to become the world's largest IPO this year.Hong Kong third in global IPO rankings for stock exchanges alt=Hong Kong third in global IPO rankings for stock exchangesBelgium-based Anheuser-Busch has picked an inopportune time to tap the financial markets, as Hong Kong is still reeling from the aftermath of a controversial extradition bill, where thousands of protesters still take to the streets around the city, more than a month after 1 million people voiced their opposition in a mass rally.The city, a financial hub for Asia and an entry point for mainland China's massive consumer market, is also squeezed by the year-long US-China trade war, which has forced companies to defer and reconsider their expansion in the city. Amid the downbeat sentiments, ESR Cayman Limited announced on June 13 that it would cancel a Hong Kong IPO plan, that could have raised between US$1.16 billion and US$1.24 billion, according to a Reuters report.Global investors have subscribed for more than US$10 billion worth of Budweiser shares. Still, about 70 per cent of these orders are from hedge funds who bought at prices near the bottom end and tend to hold for the short term, according to a fund manager who declined to be named.The remaining investors are global long-only funds. Chinese long-only funds have snubbed the offer in favour of Hong Kong-listed China Resources Beer, a brewing company headquartered in Beijing.The lack of institutional support for the share has some investors worried that it may slip beneath its offer price during next week's debut.The offeror "wants to sell the share at HK$47 apiece, but the market sentiment seems to be inclining toward Hk$40 and that's a huge discount," said Louis Tse Ming Kwong, managing director of VC Asset Management. "So the major factor is fixing the share price at the right level."Another worry is that China's consumption of beer and other alcohol could be dampened by a government crackdown on organised crime since the start of the year, which has hurt business at karaoke bars and late-night restaurants in cities across China."The listing could be suspended or withdrawn if the company cannot set the price on Monday," said Steven Tse, senior equity research analyst at Hong Kong brokerage SBI China Capital.Cases of Budweiser beers are displayed in a Shanghai's supermarket on October 24, 2004. Photo: Agence France-Presse alt=Cases of Budweiser beers are displayed in a Shanghai's supermarket on October 24, 2004. Photo: Agence France-PresseThe Hong Kong retail tranche of the offering, accounting for 5 per cent of the overall shares, was estimated by local brokerages to be 3.7 to 5 times oversubscribed, a tepid response in comparison to interest such mega listings have attracted from local investors in the past.The huge scale of the listing led to a drop in local cash deposits, triggering a surge in Hong Kong's interbank lending rate (Hibor), or the rate at which banks lend to each other. As interest rates rose, retail investors became less enthusiastic towards the listing offer, brokers said.One-month Hibor spiked to 2.99 per cent late last week, the highest level since October 2008, before easing to 2.18 per cent on Friday.Budweiser sells more than 50 beer brands in 39 territories, and counts China, Australia, South Korea, India and Vietnam among its key markets in Asia-Pacific.The brewer is the largest by sales in China, according to data from industry consultancy GlobalData cited in Budweiser's prospectus.The company focuses on high-end beer, which represents the fastest-growing segment in the Asian market, according to GlobalData.Proceeds from the listing will be used to repay loans due to AB InBev subsidiaries, according to the listing prospectus.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
(Bloomberg) -- Anheuser-Busch InBev NV’s decision to suspend what was slated to be the year’s largest initial public offering leaves Hong Kong’s stock exchange with half the IPO volume that it would’ve had this year if the $9.8 billion listing had gone ahead.The world’s biggest brewer said in a statement on Friday that it had decided not to proceed with an IPO of its Asia Pacific unit, Budweiser Brewing Company APAC Ltd. The company had been struggling to price its shares, people familiar with the matter had said earlier. The move leaves the brewer without the IPO proceeds it had sought to help pay down debt and fund acquisitions.It also cuts into the Hong Kong exchange’s tally. The IPO could have doubled the $9.44 billion raised from 79 other Hong Kong listings this year, according to data compiled by Bloomberg. That dampens momentum generated last year when 202 companies raised $36.8 billion, the most since 2010.Even at the bottom of its targeted range, the Budweiser Brewing APAC share sale would have topped Uber Technologies Inc.’s $8.1 billion U.S. listing in May, which remains the biggest globally this year.IPOs in the U.S. remain on track for the best year since 2014, with more than $32 billion raised in 95 listings, the data show. The U.S. surge was driven largely by so-called tech unicorns, startups valued at $1 billion or more, many of them going public after years of investor anticipation. Those companies included Uber’s smaller ride-hailing rival Lyft Inc., with its $2.34 billion listing in March, and the image-sharing website Pinterest Inc.Listing CompetitionGlobally, though, the IPO pace has slowed. Companies have raised about $83 billion in 654 listings this year, less than half the annual totals in 2018 and 2017. In that environment, exchanges are increasingly competing for listings.Hong Kong Exchanges & Clearing Ltd., which owns and operates the city’s exchange, has been engaged in an increasingly crowded battle for listings as exchanges from Shanghai to Singapore ease rules to attract fast-growing companies.U.S. exchanges are also continuing to attract Chinese companies despite trade conflicts. Video-game live-streaming platform DouYu International Holdings Ltd. is set to price its shares Tuesday, raising as much as $944 million in what will be the largest U.S. IPO by a China-based firm this year.The Hong Kong exchange’s reputation also took a hit with the arrest last month of the former joint head of its IPO vetting team and two others on charges of corruption and mismanagement in relation to two listing applications, which weren’t disclosed.Alibaba BoostStill, other mega IPOs are waiting in the wings that may give the exchange an enormous boost. Alibaba Group Holding Ltd. is preparing to raise as much as $20 billion in a second offering in Hong Kong, people familiar with the matter have said. That share sale would be the exchange’s largest since 2010.AB InBev’s Asia unit was offering 1.63 billion shares in its IPO at HK$40 to HK$47 each. That range valued the unit at 28.5 to 33.5 times consensus 2020 earnings, higher than valuations for competitors Heineken NV and Carlsberg A/S.‘Too Lofty’Hoai Ngo, a senior credit analyst at Bloomberg Intelligence, said expectations had been “a little too lofty” for the listing.“The valuations they gave in the range were too high to begin with,” Ngo said. “When they were pricing the IPO with a mid-twenties multiple, it was probably a little bit too high.”What Bloomberg Intelligence Says“The cancellation of Anheuser-Busch InBev’s Asia IPO end expectations for quicker deleveraging. The brewer’s bonds rallied on expectations the offering’s proceeds would hasten debt reduction. But now this will be accomplished by the company focusing on improving cash flows.”-Hoai Ngo, analystAB InBev cited “prevailing market conditions” in putting the unit’s IPO on ice.“We will closely monitor market conditions as we continuously evaluate our options to enhance shareholder value, optimize our business and drive long-term growth, subject to strict financial discipline,” said Pablo Jimenez, a spokesman for the company.AB InBev’s American depositary receipts on Friday fell 3% to $86.94 in New York.Beer BusinessThe beer business has been booming in parts of Asia.In addition to reducing debt, AB InBev, the maker of Stella Artois, Corona and Modelo, had seen splitting off one of its growth motors as a way to woo local partners. A separate Asian unit would have made it easier to form tie-ups involving shareholdings and stake swaps.Budweiser Brewing APAC is the biggest foreign brewer in China and trails only China Resources Beer Holdings Co., maker of Snow beer, the country’s top-selling brew by volume.\--With assistance from Thomas Mulier, Thomas Buckley, Anne Riley Moffat, Lulu Yilun Chen, Philip Lagerkranser and Benjamin Robertson.To contact the reporters on this story: Michael Hytha in San Francisco at firstname.lastname@example.org;Crystal Tse in Hong Kong at email@example.com;Manuel Baigorri in Hong Kong at firstname.lastname@example.orgTo contact the editors responsible for this story: Fion Li at email@example.com, ;Liana Baker at firstname.lastname@example.org, Michael Hytha, Amy ThomsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Anheuser-Busch InBev stock was falling Friday after the company confirmed it won’t go ahead with an offering for Budweiser Brewing Co. on the Hong Kong stock exchange.