AB InBev’s IPO turns sour
THE share price of Anheuser-Busch InBev (AB InBev) fell almost two percent on the JSE after the brewer announced that it was not proceeding with the initial public offering (IPO) of a minority stake in its Asia-Pacific subsidiary, Budweiser Brewing Company Apac on the Hong Kong Stock Exchange.
The world’s largest brewer said it shelved the IPO on Friday due to several factors, which included the prevailing market conditions.
A successful IPO would have given Budweiser Apac a market capitalisation of roughly $54 billion to $64 billion, according to market analysts.
The group expected to raise as much as $9,8 billion by selling the stake in its subsidiary and help to reduce its debt.
The debt escalated when AB InBev acquired South African brewer, SABMiller, for $100 billion in 2016.
The group cut its dividend by half in October last year in an effort to save $4 billion to pay down its loans.
However, the group, which owns brands such as Corona, Budweiser and Stella Artois, said yesterday that it might evaluate its options in the near future.
The group has more than 500 brands across the globe.
“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 group said.
Jordan Weir, a trader at Citadel, said first and foremost the cancellation of the Asian IPO will impact the duration of the expected settlement period of the company’s debt burden which was largely brought about by the purchase of SABMiller in 2016.
“Although the IPO was not necessarily pivotal in paying off AB InBev’s debt, it certainly would have helped.
“The negative movement in the company’s share price means that the company has lost some short-term investor confidence as well as the opportunity to potentially increase its level of liquidity,” Weir said.
He added that the fall in the share price yesterday morning was the kind of a reaction seen when investor confidence takes a knock.
“The IPO cancellation influenced a negative move in the share price amid concerns over the company’s debt levels and credit rating,” he said. – IOL