Asahi is acquiring Carlton & United Breweries from Anheuser-Busch InBev (BUD) for JPY 1.2 trillion ($11.3 billion) in a deal that we think is financially slightly better for AB InBev than for Asahi. Nevertheless, the valuation effect appears negligible, and we are maintaining our fair value estimates for both companies.
From Asahi’s perspective, we were surprised by this development because the deal is much larger than the bolt-on acquisitions that management had previously expressed interest in. We believe Asahi is eyeing the opportunity to leverage Carlton & United Breweries' production capacity and distribution capabilities to expand sales of the premium brands including Peroni and Super Dry in Australia and potentially in Southeast Asia. The deal, priced at 14.9 times enterprise value/normalized 2018 EBITDA, seems somewhat expensive but is in line with the multiples that Asahi paid for SABMiller’s Western and Eastern European operations in 2016 and 2017.
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Jeanie Chen does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.