You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Business

  • GM quarterly profit falls 85% on recall costs
    DETROIT – Recall expenses chopped $1.5 billion from General Motors’ bottom line in the second quarter, as it added up the costs of repairs for nearly 30 million cars and set aside funds to compensate victims of small-car crashes.
  • China detains employees of suspect meat seller
    Five employees of a company accused of selling expired beef and chicken to McDonald’s, KFC and other restaurants in China were detained by police Wednesday after an official said illegal activity was an organized effort by the
  • Meat supplier in China scandal has global reach
    It isn’t a household name, but the company at the center of a food scandal in China helps make some of the world’s most popular foods, including the Big Macs and Quarter Pounders served at McDonald’s locations.
Advertisement
Associated Press
Anheuser-Busch InBev is paying more than three times for Oriental Brewery than what it sold the business for in 2009.

Bud maker to regain Asian brewer

To buy back S. Korea’s beer leader

– 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.

Advertisement