Asahi Pays Big for AB InBev Beer Brands, but Was it Worth It?

In Tokyo, Japan, this week, Asahi Group Holdings Ltd has signed an agreement to acquire brewing assets from Anheuser-Busch InBev NV in five Eastern European countries at a price of roughly of $7.8 billion. This, of course, is just the latest deal in a brewing/beverage industry that has gone through massive swings over the past few years; and the most recent major trans-continental deal from a Japanese food-and-drink industry that is having trouble maintaining its core business in its home nation.

Of course, it should definitely be noted that AB InBev—which only recently grew to its massive size—had put these five brewing assets on the block as part of its strategy to win regulatory approval for yet another merger, this time with SABMiller. And it looks like that effort was quite successful as that merger was completed in October.

But which Eastern European brewing assets are we talking about? Well, the sale includes the Czech brewer Plzensky Prazdroy (who makes the Czech beer Pilsner Urquell) as well as Polish beer brands like Lech and Tyskie. These brands, of course, will help to bring yet more international diversity to Japan’s Asahi brand which was, at one point, among the top beer makers in the Japanese market (even if it failed to reach such heights in the rest of the world).

But while Asahi Group is happy with the deal—as a means to stay afloat and regain lost ground at home—some investors are not too happy with it. For one, the deal came with a somewhat hefty price tag; one that investors, of course, probably do not want to pay. Still, that’s what you should expect when dealing with AB InBev, who has been more in buying mode than a selling mode the past few years. Asahi had only budgeted for a maximum of $4 billion in overseas acquisitions so this deal does put them at nearly double what they had hoped to spend.

Indeed, Rakuten Securities chief strategist Asayuki Kubota comments, “Asahi is heading in the right direction by expanding overseas, but the price seems too expensive. Investors will be watching whether Asahi can offer a reasonable explanation about the high price.”