Share

AB InBev starts marketing debt to finance SABMiller takeover

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.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.88
+0.3%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders