Japan’s Asahi takes full advantage of AB InBev and SABMiller asset stripping

- Finance - Dec 13, 2016

Japanese drinks manufacturer Asahi is set to buy AB InBev's Eastern European beer brands for $7.8Bn, paving the way for the formation of a super brewer merger between the Belgian company and South Africa’s SABMiller.

John Colley, a Professor of Practice at Warwick Business School and an expert on mega-mergers, has made the following statement:

"The fallout from the $106Bn AB InBev purchase of SABMiller continues with the disposal of SABMiller's Eastern European brands for $7.8Bn to Asahi, this takes Asahi's investment to over $10Bn following their $2.5Bn purchase of Grolsch and Peroni, also part of the fallout from the AB InBev deal.

"Asahi has become a major power in Europe's competitive brewing market from nothing in the space of a few months. There do remain opportunities for further growth in Eastern Europe, unlike the Western European beer market which is mature and under attack from craft beers, wine, cocktails and spirits.

"Alcohol consumption is falling in the west as health concerns prevail. In Eastern Europe, there is an opportunity for beer to continue displacing high levels of spirit consumption. Asahi is paying a high price for the remaining AB InBev assets, around 50 percent more than the market expected reflecting growth expectations.

"AB InBev has had to sell all the North American, European and Chinese brands and brewing capacity purchased as part of SABMiller as competition authorities take a tougher line than expected.

"So far asset sales have recouped around $23Bn of the $106Bn paid. However far more than 20 percent of total SABMiller earnings capacity has been disposed of, effectively increasing the price for the growth areas of Africa and South America.

"The deal has become very expensive, although it is likely the savings will be far more than the announced $1.4Bn."

Read the December 2016 issue of Business Review Europe magazine. 

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