Asahi to buy SABMiller unit for $7.8 billion

The deal, expected to close in the first half of next year, would be Asahi's biggest acquisition

Asahi Group Holdings agreed to buy SABMiller Plc’s eastern European assets including Pilsner Urquell from Anheuser-Busch InBev NV for 7.3 billion euros ($7.8 billion), as the Budweiser maker ties up loose ends after combining the world’s two biggest brewers.

Asahi expects the acquisition to close in the first half of 2017, and is positioning its overseas business as a growth engine to establish itself as a global player, the Tokyo-based brewer said Tuesday.

The deal further strengthens Asahi’s foothold in Europe after Japan’s largest brewer agreed to pay 2.55 billion euros ($2.7 billion) for AB InBev’s Peroni and Grolsch brands earlier this year. For AB InBev, the divestment brings it a step closer to meeting the antitrust commitments that allowed it to buy SABMiller for about $100 billion.

“We had estimated a value between $5 billion and $6 billion, so the price paid by Asahi looks pretty full and great for AB InBev,” Trevor Stirling of Sanford C Bernstein said by phone. The analyst estimates the market share by beer volume that Asahi will now have in Europe, excluding Russia, is about 9 per cent.

Asahi shares fell 4.6 per cent by the close of Tokyo trading Tuesday, the biggest drop since June. The purchase would be the largest by a Japanese brewer since Kirin Holdings Co.’s A$4.8 billion ($3.6 billion) acquisition of Australia’s Lion Nathan Pty in 2009, according to data compiled by Bloomberg.

The deal would value the SABMiller assets at about 15 times Ebitda for the year ended March 2016, a higher multiple than analysts had expected.

A completed sale would bring some much-needed cheer for AB InBev investors, who have seen the stock slide 15 per cent this year through Monday.