Asahi Is Paying a Premium for SABMiller AssetsBy and
Japanese company’s price represents 15-times assets’ Ebitda
Offer has raised concerns that the company may have overpaid
Asahi Group Holdings Ltd. is paying a hefty premium for the business that owns Czech lager Pilsner Urquell, extending a pricey dealmaking spree by Japanese companies eager to find new growth overseas.
The company’s bid for SABMiller Plc’s eastern European assets beat the next-highest offer by about 800 million euros ($834 million), people familiar with the matter said, asking not to be identified because the process was private.
Japanese companies pay higher premiums on average than their counterparts in the rest of the world, bidding aggressively in overseas deals that will help them diversify away from a shrinking population at home. Buyers from the country paid an average premium of 33 percent this year for foreign assets, according to data compiled by Bloomberg. That compares to a global average of 22 percent, the data show.
SABMiller’s European assets had earnings before interest, taxes, depreciation and amortization of 493.8 million euros in the year ending in March 2016, according to a statement from Asahi on Tuesday. That puts Asahi’s winning, 7.3 billion euro bid at about 15-times Ebitda. The median price for a brewery deal has been about 11.5 times trailing, 12-month Ebitda in the past five years, according to data compiled by Bloomberg.
Representatives for Asahi and AB InBev declined to comment.
‘The High Side’
The deal, Asahi’s biggest ever, has raised concerns that it may have overpaid. The assets had been valued at about $5.5 billion to $6 billion, people familiar with the process said last month. Asahi’s shares have declined about 6.4 percent since the day before the deal was announced.
Sanford C. Bernstein analyst Trevor Stirling, who had estimated the assets to be worth $5 billion to $6 billion, said the price was “pretty full” and Mitsubishi UFJ Morgan Stanley Securities Co. analyst Tomonobu Tsunoyama called it on the “high side.”
Asahi beat rival offers from about half a dozen bidders who made it to the final round, including Swiss investment group Jacobs Holding AG and Snow lager maker China Resources Beer Holdings Co., the people said previously.
All told, Asahi has agreed to spend almost 10 billion euros acquiring the European assets being disposed as part of Anheuser-Busch InBev NV’s tie-up with SABMiller, making it the third-largest brewer in Europe. Earlier this year, Asahi agreed to pay 2.55 billion euros for the Peroni, Grolsch and Meantime beer brands.