Brewer Anheuser-Busch InBev (AB InBev) is exploring options for its packaging activities as it streamlines its portfolio and focusses on its core beverage business, sources close to the matter have said.
The company is working with Deutsche Bank on a deal for its US-based canning activities, which AB InBev inherited when it bought Anheuser Busch in 2008, the people said.
Deutsche Bank has been hired to explore a sale of a minority stake or a joint venture for AB InBev's North American bottling and canning activities which could be worth $5 billion to $6 billion, one of the people said, adding that it was not aiming for an outright sale.
The $52 billion Anheuser-Busch InBev merger in 2015 spurred a series of divestments, notably of non-beer activities, such as its theme parks. St Louis-based Metal Container Corp was mooted as a possible asset for sale at the time, but instead it was kept.
Now, after its $100 billion plus purchase of nearest rival SABMiller in 2016, AB InBev is again looking to reduce its debt, selling its Australian business and beer brands in Europe and floating part of its Asian operations.
Anheuser-Busch InBev and Deutsche Bank declined to comment.
Profit Warning
Several weeks ago, Anheuser-Busch InBev issued a profit warning and posted weaker-than-expected third-quarter earnings growth sparked by reduced demand for its beer in Brazil and South Korea.
The cautious outlook came after main rival Heineken trimmed its 2019 guidance following an unexpected dip in sales in the Americas.
Sounding Out Interest From Private Equity Firms
Anheuser-Busch InBev has already been sounding out interest from private equity firms for the packaging operations, one of the people close to the matters said.
Another source said that he expects the business to be valued at approximately 11 times earnings before interest, tax, depreciation and amortization. Peer Ball trades at 14 times its expected core earnings, while other peers like Crown, Silgan and Ardagh trade at around 10 times.
"The main question is what value is attached to the supply contract that any buyer would seal with AB InBev", one of the people said. While the packaging business makes bottles for other parties as well, AB InBev is by far its largest customer.
News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.
