THE BOTTOM LINE
Beer with us for a second while we shake up the market
Why would the biggest brewer, AB Inbev, even think of selling its fast-growing Asian business? It is bizarre
It is difficult to know what to make of the recent speculation AB InBev might consider selling off a portion of its Asian business after separately listing it. Was this just the world’s largest beer group trying to test the market to see what could be done to reclaim some of its allure?
For a company that spent almost three decades acquiring its way to the top position in the global beer market it seems a tad bizarre to imagine that having secured that position, by a hefty margin, it might now contemplate unraveling it.
The reports caused a flutter of excitement in the analyst community and helped to lift the share price, which has been drifting steadily downward since 2016 when it finalised the $107bn SABMiller acquisition.
The group’s dramatic rise from relative Brazilian obscurity to global household name was largely down to the deal making genius of private investment firm 3G Capital. Jorge Lemann, who led the private equity firm, early on realised that beer offered the best opportunity for global domination. Part of this realisation was understanding what had to be done to keep deal makers and investors happy.
Ever-bigger and bolder acquisitions generating ever-larger fees ensured the 3G-backed beer group was the darling of the investment community for decades.
Inevitably, even before the details were finalised on the SABMiller acquisition, analysts were looking to the next big deal. With no more sizeable beer opportunities, attention turned to soft-drinks and Coca-Cola was quickly identified as the too-big-to-imagine deal.
But as the weeks turned to months it became evident AB InBev management believed they had enough on their plate. Suddenly there was nothing exciting about the group, and the share price languished.
Industry analysts, as opposed to investment analysts, say a sale – particularly of a section that has exciting growth prospects – is bizarre. The group’s debt is indeed hefty but is being well managed. They urge AB Inbev not to resume feeding the market’s deal addiction.