Asahi to buy Carlton & United Breweries for AUD16.0bn ABI announced it has sold its Australian business to Asahi for an enterprise value of AUD16.0bn, or US$11.3bn, following the aborted partial IPO of its Asian operations. The transaction is expected to close in the first quarter of 2020. There is no specific comment on the expected impact on EPS, but give the high margin of Australia, we believe the transaction will be slightly (low single-digit) dilutive. But we think the market will generally take this announcement well, as it helps ABI to deleverage and relieves it of an asset that was widely seen as non-core. A logical move, at the right price The press release indicates Australia was sold for an EV/EBITDA multiple of 14.9x; this compares to 12.1x when SAB bought Fosters in 2011 and is slightly on the high side for developed market beer assets – albeit Carlton & United is the strong #1 in the market by volume and value. ABI says it will uses the proceeds to deleverage. We believe Australia was a low priority market for ABI, as it was a mature beer market, with a challenging retail structure, that had already been squeezed for cash. ABI says it will continue to explore options to list a minority stake of its remaining Asia business (China, Japan, India, South Korea being the main markets left), as it intends to participate in M&A opportunities in the Asian region in the future.