INBEV NV's South Korean unit, Oriental Brewery, said yesterday that its Belgian parent doesn't plan to sell the division to fund its US$52-billion Anheuser-Busch Co takeover, denying a report from Tuesday, Bloomberg News reported.
"We confirmed from InBev that it has no plan at all to sell the unit," a statement from Oriental's press agency said. However, InBev spokeswoman Marianne Amssoms did not comment on Oriental's statement. She said the Belgian brewer plans "non-core" asset sales and insisted it was too early to discuss specific targets.
InBev, the maker of Stella Artois and Beck's, is financing the Anheuser takeover with US$45 billion of loans and is examining asset sales to repay some of that debt.
InBev would sell Oriental after that deal was done, potentially raising US$2 billion, earlier reports said. The Financial Times yesterday said some of InBev's German brands and its stake in China's Tsingtao Brewery Co may also be sold.
Oriental "could be one of the most likely candidates for disposal," Wim Hoste, an analyst at KBC Securities in Brussels, said yesterday before the Korean business unit denied the sell-off report. "InBev's Asia-Pacific presence is mainly focused on China. I would assume it's an asset that they could easily sell."
InBev, the world's largest brewer by sales, is buying Anheuser, the maker of Budweiser, to grab half the United States market and gain scope to cut costs as commodity prices soar.
The FT report, which cited unidentified people with knowledge of the matter, said InBev's only "concrete decision" was to sell Anheuser's theme-park division, whose assets include Busch Gardens and SeaWorld. The report said Anheuser's packaging unit may also be sold. In 2004, InBev paid 612 million euros (US$884 million) to boost its stake in Oriental, the second-largest brewer in South Korea, to 95 percent from 50 percent. The company has about 40 percent of the local market, trailing Hite Brewery Ltd and sold about 6.9 million hectoliters of beer in 2007.
"South Korea is a relatively mature market and quite profitable, but not a significant profit driver" for InBev, said Trevor Stirling, an analyst at Sanford C Bernstein. "It would not surprise me if they would sell it. They may also sell secondary brands in Germany, such as Hasseroeder" and some eastern European labels, he said.
A US$2-billion price for Oriental seems "a little high," KBC's Hoste said. InBev hired Deutsche Bank AG and JPMorgan Chase to run the auction for Oriental Brewery.
InBev said last month that its South Korean unit had a "solid" first half, with volume rising 4.8 percent and market share increasing.