KKR and Affinity Exit Oriental Brewery
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KKR and Affinity Exit Oriental Brewery

OB NFAB InBev has entered into an agreement with KKR and Affinity Equity Partners to acquire Oriental Brewery, a South Korea brewer, for $5.8 billion. The transaction is subject to regulatory approval in South Korea and is expected to close in the first half of 2014.

Oriental Brewery (OB) is South Korea’s largest beermaker. Brands include OB, Cass and Cafri. The company was founded in 1933 and is based in Seoul (www.ob.co.kr). OB will become a part of AB InBev’s Asia Pacific Zone, led by Zone President Michel Doukeris.

Oriental Brewery’s EBITDA in 2013 was 529 billion won ($497 million) compared with 238 billion won ($293 million) in 2009. This translates to a purchase multiple of approximately 6.1x in 2009 and a sale multiple 2014 of 11.7x.

KKR acquired Oriental Brewery from InBev in July 2009 for $1.8 billion. As part of that transaction, InBev had a five-year option to repurchase the company from KKR based on a formula driven EBITDA valuation. After closing the purchase, KKR then sold 50% of Oriental Brewery to Affinity Equity Partners.

The July 2009 sale of Oriental Brewery to KKR was part of an asset sale program initiated by InBev to pay down acquisition debt related to the company’s $52 billion purchase of Anheuser-Busch in 2008.

“We are proud to have partnered with Oriental Brewery these past five years,” said Joseph Bae, Managing Partner of KKR Asia and Kok Yew Tang, Chairman and Managing Partner of Affinity. “The success experienced since 2009 is a testament to all the employees of OB, and we are gratified to have invested in the company and supported the company’s growth as well as their environmental and citizenship initiatives.”

AB InBev is a Belgian-Brazilian multinational beverage and brewing company. It is the world’s largest brewer with nearly 25 percent global market share. The company has more than 200 brands which include Budweiser, Corona, Stella Artois, Beck’s, Lowenbrau, and Bud Light. The company employs around 116,000 people in over 30 countries and is headquartered in Leuven, Belgium (www.ab-inbev.com).

AB InBev will fund the acquisition of Oriental Brewery with internal resources.

KKR makes private equity, fixed income and other investments in companies in North America, Europe, Asia and the Middle East. The firm has $90 billion in assets under management. KKR was founded in 1976 and in addition to its New York headquarters the firm has offices in Menlo Park, San Francisco, Houston, Washington DC, London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney (www.kkr.com).

Affinity Equity Partners has $8 billion of assets under management and typically invests in companies with enterprise value or net sales of $100 million to $500 million that are located in Australia, Greater China, Hong Kong, Japan, Korea, Singapore and Taiwan. The firm is industry agnostic but has specific interest in consumer-related goods and services, value-added manufacturing, healthcare, financial services and business services sectors. Affinity Equity was formed in March 2004 following the spin-off by UBS AG of its UBS Capital Asia Pacific team. Affinity currently advises and manages approximately $8 billion of funds and assets, making it one of the largest independent private equity firms in the Asia region. Affinity has offices in Hong Kong, Singapore, Seoul, Sydney, Beijing and Jakarta (www.affinityequity.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-21-14

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