Anheuser-Busch InBev buys back S Korea's Oriental Brewery for $5.8 bn

Beer giant Anheuser-Busch InBev will buy back South Korea's Oriental Brewery (OB) from private-equity firms KKR & Co and Affinity Equity Partners for $5.8 billion in order to strengthen its position in the Asia Pacific region.

Leuven, Belgium-based AB InBev said that it will fund the acquisition with internal resources, and will receive about $320 million in cash when the transaction is completed.

AB InBev, the world's biggest brewer, had sold OB in 2009 for $1.8 billion as part of the divestment by InBev in order to raise money for its $52 billion acquisition of US brewer Anheuser-Busch in 2008 (See: InBev completes Anheuser Busch acquisition).

KKR has reaped nearly three times the $1.8 billion  it paid to buy  OB. The US-based PE firm later sold half of its stake in OB to regional PE firm Affinity.

Post sale to  KKR and Affinity, OB has grown to become the largest brewer in South Korea, driven by strong growth of the Cass brand.

OB and AB InBev were long-term partners through Oriental Brewery's exclusive license to distribute select AB InBev brands in South Korea such as Budweiser, Corona and Hoegaarden.

Carlos Brito, CEO of AB InBev, said, ''OB will strengthen our position in the fast-growing Asia Pacific region and will become a significant contributor to our Asia Pacific Zone. The management team at OB has done a tremendous job of growing the business over the last few years into the leader it is today in South Korea. We look forward to working with the OB team to continue to build AB InBev brands in South Korea, provide additional consumer choice and share best practices.''

''We are proud to have partnered with Oriental Brewery these past five years,'' said Joseph Bae, managing partner of KKR Asia and Kok Yew Tang, chairman and managing partner of Affinity. 

Founded in 1952 by the Doosan Group, Oriental Brewery is South Korea's biggest beer maker. InBev acquired  Oriental Brewery in 1998.

South Korea is an attractive beer market with a strong domestic growth outlook and beer volumes that grew at an annual rate of approximately 2 per cent between 2009 and 2012.

During that same period, premium brands grew by approximately 10 per cent per year. South Korea's beer market is expected to grow by more than 13 per cent in total during the 2012-2022 period.

OB will continue to be led by In-soo Chang, CEO, and will remain headquartered in South Korea under its current name. OB will become a part of AB InBev's Asia Pacific Zone, led by Zone president Michel Doukeris.