Largest brewer’s IPO turns sour
The world’s largest brewer said it shelved the IPO of its Asian business on Friday due to several factors, which included the prevailing market conditions.
A successful IPO would have given Budweiser Apac a market capitalisation of roughly $54billion (R752.35bn) to $64bn, according to market analysts.
The group expected to raise as much as $9.8bn by selling the stake in its subsidiary and help to reduce its debt.
The debt escalated when AB InBev acquired South African brewer, SABMiller, for $100bn in October 2016.
The group cut its dividend by half in October last year in an effort to save $4bn to pay down its loans.
However, the group, which owns brands such as Corona, Budweiser and Stella Artois, said yesterday that it might evaluate its options in the near future.
The group has more than 500 brands across the globe.
“The company will closely monitor market conditions as it continuously evaluates its options to enhance shareholder value, optimise the business and drive long-term growth subject to strict financial discipline,” the group said.
The share price declined to R1207.77 a share yesterday morning, down from Friday’s closing price of R1239.30.
The stock closed R1227.64 at the end of the day.
Jordan Weir, a trader at Citadel, said first and foremost the cancellation of the Asian IPO will impact the duration of the expected settlement period of the company’s debt burden which was largely brought about by the purchase of SABMiller in 2016.
“Although the IPO was not necessarily pivotal in paying off AB InBev’s debt, it certainly would have helped.
"The negative movement in the company’s share price means that the company has lost some short-term investor confidence as well as the opportunity to potentially increase its level of liquidity,” Weir said.
He added that the fall in the share price yesterday morning was the kind of a reaction seen when investor confidence takes a knock.
“The IPO cancellation influenced a negative move in the share price amid concerns over the company’s debt levels and credit rating,” he said.