Japan & Australia: Asahi’s share sale to part fund CUB acquisition remains in limbo
Asahi Group Holdings’ planned ¥200 bln (US$1.85 bln) share sale to part fund the acquisition of Anheuser Busch InBev’s Australian operations remains in limbo less than two weeks before it is due to complete the purchase, the International Financial Review reported on May 21.
Asahi, which agreed last July to acquire Carlton & United Breweries for A$16 bln (US$11.3 bln), said this month it would close the deal on June 1 after obtaining all the necessary regulatory approvals from the Australian Foreign Investment Review Board and Australian Competition and Consumer Commission.
The company has registered plans to raise up to ¥200 bln from a public offering, but has seen its financing plans disrupted by the Covid-19 pandemic.
"Given that the stock price has declined due to the Covid-19 outbreak, we are giving serious thought to share dilution," an Asahi Group spokesperson said by email. "At this moment, we are not able to advise if there will be any modification nor when an announcement will be made."
Japan's ECM bankers have been hoping that Asahi will be one of the first issuers to raise funds after the lockdown in Tokyo expires on May 31.
The state of emergency imposed on Tokyo and six other prefectures on April 7 to curb the spread of Covid-19 has shut offices and confined retail investors to their homes, derailing most equity capital market deals in Japan.
Generally, domestic retail investors in Japan take up a significant portion of major public offerings. Many of these retail buyers, known collectively as Mrs Watanabe, are over 50 and still rely on traditional brokerage salespersons to buy stocks.
Bankers also said a remote set-up is simply impossible for marketed offerings because of compliance issues.
Several IPOs have been shelved since Forum Engineering raised ¥12.7 bln in February, and only a handful of smaller convertible bonds and domestic follow-ons have been completed during the lockdown.
Asahi turned to Sumitomo Mitsui Banking Corp for a ¥1.2 trn jumbo bridge loan to cover the cost of its Australian acquisition, and needs to repay or refinance that agreement by July. It held discussions with banks on a longer-term takeout financing last year, but that package has yet to hit the market, according to Refinitiv LPC.
Asahi's weak share price may also prompt the company to look at other fundraising channels instead of selling equities.
Hit by the coronavirus pandemic, Asahi’s shares fell to as low as ¥3,006 apiece on March 19. They have since gradually recovered to open at ¥3,745 on May 20, but are still down 25.6% this year.
Carlton & United Breweries owns brands such as Foster’s and Victoria Bitter and accounts for almost half the beer market in Australia. Nomura is the lead manager of the equity raising.
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