The world’s largest brewer, Anheuser-Busch InBev, has agreed to buy South Korea’s Oriental Brewery from KKR & Co and Affinity Equity Partners for a whopping 5.8 billion including debt, regaining ownership of a key Asian asset at a time of strong growth in the industry across the region.
The deal is Asia’s biggest ever private equity sale through an acquisition. It comes one week after Japan’s Suntory Holdings agreed to buy Beam Inc for $13.6 billion, with transactions underscoring rapid consolidation in the global liquor industry per CNBC.
Carlsberg, Heineken and SABMiller have also scored their own deals in Asia throughout the past five years, enticed by the region’s $258 billion market that is growing twice as fast as the rest of the world.
Oriental Brewery was sold by Leaven, Belgium-based AB InBev, in 2009 for $1.8 billion to KKR, as part of its attempt to ease the debt burden incurred in the $52 billion acquisition of U.S. beer maker Anheuser-Busch by InBev a year earlier. KKR agreed to pay approximately $800 million in cash for OB and the rest in debt, later splitting the cash part with Affinity roughly in half.
“Oriental Brewery will strengthen our position in the fast-growing Asia Pacific region and will become a significant contributor to our Asia Pacific zone,” Carlos Brito, Chief Executive Officer of AB InBev said in a statement.
AB InBev has a mostly small presence in Asia Pacific, with the region accounting for 14.3 percent of the 403 million hectoliters of beer it sold and 2.5 percent of its $15.5 billion in earnings before taxes, depreciation, interest, and amortization in 20102.
KKR and Affinity’s sale of Oriental Brewery represents a multiple of five times the cash they paid, per a source that is familiar with the matter, a huge return for a deal of this size, securing the firm with hundreds of millions of dollars in net profit.