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The world’s largest brewer, AB InBev has announced its first quarter earrings and hinted at making all kinds of moves to strengthen its dominance in China, a position that is being challenged by other importers such as Heineken and Carling.
On Tuesday, the Belgian-based global brewer “ confirmed that it might sell a minority stake in its Asia-Pacific operations — a deal that could value the business at as much as $70 billion — and list the shares on the Hong Kong Stock Exchange,” according to Bloomberg.
“The merits are really connected to creating a local champion in the consumer space,” Chief Financial Officer Felipe Dutra said by phone. “It’s a good platform for potential consolidation, and if we decide to proceed with the listing, we’ll get to our deleveraging target faster.”
And “potential consolidation” is corporate-speak of brewery acquisitions, a tactic that AB InBev is more than familiar with.
In addition to helping the brewing giant pay down the considerable $102.5 Billion debt it has incurred since its purchase of SABMiller in 2016, an Asian IPO could give AB InBev more strategic flexibility to seek local partners and help counter escalating challenges by its competitors who are growing their presence in China.
Heineken recently closed on its partnership with China Resources Beer Holdings Co., having acquired a $3.1 billion stake in China’s top beer maker. The Dutch company is actively challenging AB InBev’s position as the largest foreign brewer in the world’s biggest market, one that has also attracted Carlsberg A/S.
AB InBev also recorded its fastest earnings growth in five quarters, joining brewers such as Heineken NV that have already reported a strong start to the year.
“Revenues for its portfolio of so-called global brands, including among others Stella Artois, Hoegaarden and craft beers, rose by nearly 20 per cent in the first quarter, according to Financial Times.
