May 7/M2 EquityBites -- Anheuser-Busch InBev and Kohlberg Kravis Roberts & Co. L.P (KKR) announced that the companies have entered into an agreement under which Anheuser-Busch InBev will sell Oriental Brewery (OB), a large brewery based in South Korea, to an affiliate of KKR, for $1.8 billion.
Anheuser-Busch InBev will reportedly continue its relationship with OB through the exchange of best practices, granting KKR exclusive licenses to distribute certain brands in South Korea, including Budweiser, Bud-Ice and Hoegaarden, and by having an ongoing interest in OB through an agreed earnout.
Also, AB InBev will have the right but not the obligation to reacquire OB within five years after closing of the transaction at pre-determined financial terms.
The divestiture of OB is reportedly a part of Anheuser-Busch InBev's ongoing de-leveraging program and allows the company to unlock shareholder value, generating proceeds that will be used to repay debt incurred as a result of InBev's acquisition of Anheuser-Busch in November 2008.
AB InBev expects the impact on recurring results to be immaterial and expects a non-recurring capital gain of approximately $500 million. The capital gain reportedly may be affected, amongst other things, by the foreign exchange rate at closing.
The transaction, which is subject to customary approvals under Korean law and to other customary closing conditions, is expected to close in the 3Q of 2009.
From the May 11, 2009, Prepared Foods E-dition