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AB InBev sells 20 per cent Tsingtao stake to Asahi for US$667 million

By: THE ASSOCIATED PRESS

23/01/2009 6:30 AM | Comments: 0

BRUSSELS, Belgium - Anheuser-Busch InBev said Friday it will sell most of its stake in China's biggest brewer Tsingtao to Asahi for US$667 million to help pay off massive debt on the takeover deal that formed it last year.

AB InBev will sell 19.9 per cent of Tsingtao and keep a seven per cent stake. It said it had no plans to sell any more.

Japan-based Asahi Breweries will now become the second-largest shareholder in Tsingtao with a 31 per cent stake, dwarfed only by Tsingtao Brewery Group.

AB InBev leapt into the top spot as the world's largest beer company last year when InBev won over a hostile Anheuser-Busch with a sweetened $52 billion deal that saw it borrow a $45 billion bridging loan to finance the deal.

But the deal had a tough time with Chinese antitrust regulators, who barred the company from increasing existing stakes in Chinese brewers. They said that was necessary to prevent AB InBev becoming a monopoly in the country.

This capped InBev's 28.5 per cent holding in Zhujiang Beer Ltd. and Anheuser-Busch's 27 per cent stake in Tsingtao.

It also curbed its future growth in the world's most populous nation. The company is prohibited from linking up with two leading Chinese breweries, Huarun Snow Beer Ltd. and Beijing Yanjing Beer Ltd.

AB InBev Chief Executive Carlos Brito said the company was still strongly committed to China as the largest beer market in the world.

"With strong local brands such as Harbin and Sedrin and global brands such as Budweiser, we are well positioned to benefit from the significant potential in this important market," he said.

Faced with a global recession and a heavy debt burden that has cut the company's ratings, AB InBev is slimming costs and shedding workers - including some 1,400 jobs in the United States.

It is also trying to raise more capital from selling new shares and bonds.

It said Thursday it was issuing some euro1.9 billion ($2.45 billion) in euro and British pound bonds to fund its takeover deal from last year. That comes on the heels of a $5 billion (euro3.87 billion) U.S. dollar bond sale it announced last week.

It issued euro6.4 billion ($8.26 billion) in new shares in December to help pay off another $9.8 billion short-term loan.

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