What goes around

7 May 2009 By John Foley Follow @johnsfoley

The brewing giant drove a hard bargain to buy Budweiser last year. Now it’s on the end of one. KKR has snapped up AB s Korean business, Oriental Brewery, for $1.8bn but thanks to a heap of concessions it had to make, the actual price looks about 15% lower.

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AnheuserBusch Inbev agreed to sell Oriental Brewery, its Korean unit, to Kohlberg Kravis Roberts for a headline price of $1.8bn. The Belgian brewer needs to repay $7bn of debt it took on to buy Anheuser Busch, which makes Budweiser, in late 2008.

Of the $1.8bn price, around $750m came from KKR's own money, according to a person familiar with the situation. A further $300m came from a socalled payinkind note provided by ABInbev, with the rest in regular loans.

ABInbev retains the right to buy back OB after five years at a price of eleven times the previous year's ebitda, the person said. That compares with a purchase price for KKR of roughly nine times, based on the headline figure.

ABInbev was advised by JPMorgan, Deutsche Bank and Lazard. KKR was advised by Goldman Sachs, HSBC, ING and Nomura.

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