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AB InBev starts marketing debt to finance SABMiller takeover

Jan 13 2016 19:36
Aleksandra Gjorgievska

Company Data


Last traded 979
Change -8
% Change -1
Cumulative volume 1339223
Market cap 0

Last Updated: 26-05-2016 at 05:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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New York - Anheuser-Busch InBev NV started offering debt on Wednesday, backing its takeover of SABMiller [JSE:SAB] in the first test of the corporate-bond market’s ability to finance mega-mergers since the Federal Reserve raised interest rates.

AB InBev is selling debt in as many as eight parts with maturities ranging between three and 30 years, according to a person familiar with the matter who asked not to be identified because they’re not authorised to speak publicly.

The total US-dollar portion of the deal from the world’s biggest brewer may be around $25bn, according to a separate person familiar with the transaction on Tuesday.

That would make it the second-largest corporate sale in the greenback after Verizon Communications’s $49bn deal two years ago to fund its buyout of Vodafone Group’s stake in a wireless venture.

“It’s a well telegraphed deal of a global company with a solid business, but ultimately it will come down to price,” said Matthew Duch, a money manager at Calvert Investments in Bethesda, Maryland, which oversees more than $13bn in assets.

“There is an expectation that the company will have to leave something on the table to get the deal done but there are plenty of investors looking for quality assets to buy."

The brewer revealed in November that it has lined up $75bn of loans to help fund the purchase. That would be the largest amount ever borrowed in a single loan financing, according to data compiled by Bloomberg.

Officials at AB InBev declined to comment on the bond sale when contacted by e-mail.

Fed Policy

The offering is the biggest since the Fed ended its zero-rate monetary policy last month and comes at an increasingly volatile time in credit markets.

Investment-grade bond buyers are demanding the largest yield premium over Treasuries in more than three years amid a stock-market meltdown in China and plunging oil prices.

“Even though spreads are wide in corporate bond market, in the longer-term context of the absolute interest rate” company borrowing costs are low,” said Joe Mayo, the head of credit research at Conning, a global insurance investment manager with about $92bn under management.

The company agreed to buy SABMiller in October for about $110bn. Combined they would produce almost one in three beers worldwide.

The takeover would give AB InBev beer brands such as Peroni and Grolsch and control of about half of the industry’s profit.

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sabmiller  |  companies  |  industrial


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