HONG KONG – Anheuser-Busch InBev agreed to pay $5.8 billion for Oriental Brewery, regaining control of a company that became South Korea’s biggest brewer under KKR & Co. and Affinity Equity Partners.
AB InBev will fund the acquisition with internal resources, according to a statement from the companies Monday. The Leuven, Belgium-based maker of Budweiser and Corona will receive about $320 million in cash when the transaction is completed.
AB InBev, the world’s biggest beermaker, is buying back a business it sold to KKR in 2009 for $1.8 billion when it sought to cut debt after InBev NV’s $52 billion takeover of Anheuser-Busch Cos.
KKR subsequently sold 50 percent of the asset to Affinity. Since then, Oriental Brewery has become South Korea’s largest beermaker and more than doubled earnings, boosted by its Cass brand.
“On the surface, the deal seems odd as they’re paying more than three times for Oriental than what they sold the business for five years ago,” said Pablo Zuanic, an analyst at Liberum Capital. “However, this signals to us they see growth in South Korea – not so much in terms of market growth, but to improve share and drive the penetration of Budweiser and Corona.”
Korea’s beer market has grown about 2 percent a year from 2009 through 2012, the companies said. AB InBev plans to further develop Cass as well as throw its marketing support behind brands including Budweiser, Corona and Hoegaarden in the market.
AB InBev shares rose 1.1 percent to about $100 at 2:24 p.m. in Brussels. That gave the company a market value of about $165 billion.
AB InBev, created in the brewery world’s biggest merger, has grown to be the largest beermaker through a series of acquisitions, including taking control of Mexico’s Grupo Modelo for $20.1 billion, a deal completed last year.
Cost-cutting from that deal helped offset slumps in beer volume sold in the U.S. and Brazil, the company’s biggest markets in the third quarter of last year.
Oriental Brewery has boosted both market share and earnings since it was sold by AB InBev in 2009.
The brewer’s market share in South Korea is about 60 percent, up from about 40 percent in 2009, according to Lee Kyung Shin, an analyst at KB Investment & Securities Co.
Hite Jinro Co., which sells liquor, beer and bottled water, has said that Oriental Brewery overtook it in market share in South Korea’s brewery market in 2011.