Anheuser-Busch catches bankers by surprise with a US$11.3 billion sale to Asahi, after scrapping its US$9.8 billion Hong Kong IPO

As investors pommelled Anheuser-Busch InBev’s stock and bonds after the Budweiser maker scrapped what would have been the year’s largest initial public offering, little did they know Chief Executive Officer Carlos Brito had a Plan B that’s been in the works for months.

A week after pulling a share sale of its Asian business, AB InBev on Friday agreed to sell its Australian unit – part of the portfolio that had been offered to investors – to Asahi Group Holdings. A Hong Kong listing would have fetched as much as US$9.8 billion; the sale to the Japanese company is valued at US$11.3 billion.

The Australian deal, spearheaded by Brito and his counterpart at Asahi, Akiyoshi Koji, was the culmination of several months of clandestine conversations, mostly in London, according to people familiar with the matter. The negotiations were limited to a handful of members of the Belgian brewer’s executive committee, its long-time bankers at Lazard and senior management of Asahi, which was advised by Rothschild and Nomura Holdings, the people said.

The transaction surprised some members of separate banking teams – led by JPMorgan Chase & Co. and Morgan Stanley – that had been appointed by the world’s largest brewer to handle the listing of its Asian arm, the people said, asking not to be identified because of the sensitivity of the information. The IPO was expected to net as much as US$170 million in fees for the top two advisers.

The high-stakes turnaround is emblematic of Brito’s deal making style – leaving little to chance and considering all angles available. In 2016, he secured a US$106 billion purchase of rival SABMiller that cemented the brewer’s global dominance. AB InBev slowly ingratiated itself with SABMiller shareholders by raising its offer in small increments via five separate bids, all the while structuring a tax-efficient offer for the two largest investors, the billionaire Santo Domingo family of Colombia and tobacco company Altria Group.

Not long after Bloomberg reported in January that AB InBev was considering the Asia IPO, Asahi began weighing an acquisition of Carlton & United, the Australian business. The division is highly profitable but shows less promise for growth than some of the Belgian company’s other regional operations.

In recent years, a bond had formed between Brito and Koji, following the Japanese brewer’s acquisition of Pilsner Urquell, Peroni and Grolsch in separate deals to secure antitrust approval for the SABMiller purchase. The so-called megabrew purchase saddled AB InBev with a debt load that tops US$100 billion, prompting the company to cut its dividend last year and explore the possibility of an Asian IPO or asset sales.