Asahi Group Holdings, the largest brewing group in Japan, is even after several major acquisitions in the last years prepared to spend "billions of dollars" more for takeovers in the sector, according to Akiyoshi Koji, president of Asahi. "If there are big investment opportunities, we can make big investments," he was cited by Reuters.
Asahi, as well as several other international brewing groups, including Heineken, San Miguel, Thai Beverage Public Company, Kirin Holdings, Carlsberg and AB InBev (through its Australian Unit Carlton & United) are currently in the race to acquire one of the two state-owned Vietnamese brewing groups Sabeco and Habeco, which sold together more than 23 million hectoliters in 2016. (inside.beer, 1.8.2017)
However, “the valuation is very high. Sabeco’s stock hasn’t gone down at all,” Koji told Bloomberg in an interview. “Compared with our deals in Europe, the multiples for a Sabeco deal would be very high,” he said. Indeed the EBITDA multiple (Enterprise value divided by EBITDA) for Sabeco currently stands at 35, in comparison with 21 for Carlsberg, 20 for Heineken and 16 for Asahi. When Asahi bought several European breweries last year in two deals from AB InBev for a total of $11 billion (inside.beer, 11.10.2017 and inside beer, 13.12.2016), the company paid 14 times the earnings before interest tax depreciation and amortization.
In order to finance acquisitions of this size, Asahi needs to generate extra cash. As of June 30, Asahi’s balance sheet had cash and cash equivalent of about $737 million. A sale of its 19.9% stake in Chinese second largest brewer Tsingtao might help. As reported earlier (inside.beer, 29.1.2017) Asahi is eying a sale, which could bring additional $1.1 billion into Asahi’s coffers.
As Koji also said, the Japanese brewer might also be interested in some "bolt-on" acquisitions to boost the European businesses. AB InBev is looking at the moment for a buyer for its German breweries Hasseröder and Diebels (inside.beer, 21.6.2017). Given the history of AB InBev’s European sales, Asahi could be the right candidate for it. Compared to Sabeco, the both breweries are a bargain: The reported sales price is at about €200 million ($239m), which is far less than the 8.6 EBITDA multiple Interbrew (the predecessor of AB InBev) paid for Gilde Group (the parent company of Hasseröder) in 2003.