Dive Brief:
- A-B InBev has agreed to pay $5.8 billion to retake control of Korea's Oriental Brewery, maker of Cass Beer, from private equity investor groups KKR and Affinity.
- The sale is the largest ever exit of an investment by private equity in Asia.
- A-B InBev sold Oriental to KKR in 2009 for $1.8 billion. Under the terms of that deal, A-B retained an option to buy back the company for roughly 11 times EBITDA.
Dive Insight:
We've been pretty clear about our distaste for private equity. And at first glance, the resale of Oriental was nearly enough to make us rethink our feelings. The success that the company has achieved in the past few years is remarkable: reviving the Cass brand and connecting it to a younger audience, reaching EBITDA that is 2.5 times higher than it was before the purchase, rising from a 40% market share in Korea to 60%, etc.
But move beyond that first glance and it becomes obvious that it wasn't the folks at KKR and Affinity who turned Oriental around. The credit for that goes to Chang In-soo, the hard-charging, sales-focused CEO. Certainly the private equity teams deserve some credit for hiring Chang. But their contribution likely began and ended with that move. The remarkable Mr. Chang probably didn't spend much time talking strategy with KKR's team. Chang reportedly doesn't speak much English.
