­­InBev buys back Korean brewery in $5.8bn deal

Oliver Smith
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ANHEUSER-Busch InBev, the world’s largest brewer, has agreed to buy back South Korea’s Oriental Brewery Company (OB) for $5.8bn (£3.53bn) from KKR & Co and Affinity Equity Partners in what is the biggest ever exit by a private equity firm in Asia.

Yesterday’s deal more than triples the original $1.8bn investment by the firms that bought OB from InBev during its period of aggressive divestments after buying Anheuser-Busch for $52bn in 2008.

“We are excited to invest in South Korea and to be working with the OB team again. OB will strengthen our position in the fast-growing Asia Pacific region and will become a significant contributor to our Asia Pacific Zone,” said InBev chief executive Carlos Brito.

The deal already pushes the value of Asian merger and acquisition (M&A) activity in 2014 to $6.1bn after only two deals, above last year’s $3.3bn (45 deals) and on track to beat 2011’s record of $19.8bn (69 deals).

“We are proud to have partnered with OB these past five years,” said KKR Asia partner Joseph Bae.

“The success experienced since 2009 is a testament to all the employees, and we are gratified to have invested in the company and supported the company’s growth.”

The $5.8bn price tag is around 11 times InBev’s 2013 earnings of $500m. The average price paid for brewery companies so far this year has been nearly 18 times, making the purchase relatively cheap.


More than 25 years since it launched the biggest buyout of all time, Kohlberg, Kravis & Roberts yesterday proved it still had the same old swagger to pull off record breaking deals. The $5.8bn sale of the South Korean beer maker is the biggest private equity exit in Asia on record, dwarfing the $3.3bn raised by Lone Star Funds when it sold its 51 per cent stake in Korea Exchange Bank in November 2010. On a global scale it comes in the top 30 exits of all time, in a list dominated by US sales. KKR’s engineering of the deal helped deliver a healthy return on the company’s original investment, which it made from a $4bn war chest raised in 2007 to target Asian companies. It originally stumped up $800m from the $4bn cash pile, plus about $750m of loans provided by banks and a $300m loan from AB InBev itself to take control of Oriental Brewery in 2009. In a surprise move, it then sold half of its equity stake to an Asian-focused buyout house Affinity Equity Partners for $400m, plus half of the debt obligations. Under the terms of the deal struck in 2009, AB InBev had the right to buy the company back after five years at a multiple of 11 times earnings, which gave yesterday’s sale price of $5.8bn. KKR will receive half of the proceeds along with Affinity. It will also return $320m of cash back to AB InBev as part of the transaction. The deal is another feather in the cap for KKR’s man in Asia, Joe Bae (right), tipped as a future leader of the firm. He recently helped raise a second war chest for KKR in Asia, this time collecting $6bn from investors. Attaching the accolade of Asia’s biggest ever sale to his first fund is a landmark his second fund will hope to follow – and put him in pole position at KKR.