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TheStreet Open House

Wall Street Savors Anheuser-Busch (BUD) Reacquisition

NEW YORK ( TheStreet) -- Anheuser-Bush InBev NV (BUD) is trading higher after announcing it will repurchase Oriental Brewery, the largest brewer in South Korea, from KKR (KKR) and Affinity Equity Partners for $5.8 billion including debt.

The Belgium-based business sold Oriental to KKR in 2009 for $1.8 billion in a move to cut debt after InBev NV splashed $52 billion on its takeover of Anheuser-Busch. In the sale, Anheuser-Bush InBev (AB InBev) retained the right to repurchase Oriental within five years.

Since changing hands, Oriental has grown into the largest brewer in South Korea, due to its exclusive license to distribute select AB InBev brands in the region and driven by the strength of the Cass Brand.

"We are excited to invest in South Korea and to be working with the Oriental Brewery team again. OB will strengthen our position in the fast-growing Asia Pacific region and will become a significant contributor to our Asia Pacific Zone," said CEO Carlos Brito in a statement.

The Budweiser maker notes South Korea is an attractive beer market with volumes increasing around 2% each year since 2009. In the period from 2012 to 2022, analysts expect the South Korean beer market to grow by more than 13%.

AB InBev will fund the acquisition by drawing upon existing liquidity. Under the terms of the previous deal, AB InBev will receive $320 million in cash upon closing. The transaction, subject to regulatory approval, is expected to be finalized in the first half of 2014.

By early afternoon, shares had climbed 1.7% to $103.21.

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