Dive Brief:
- Analysts are expressing surprise that A-B InBev would finance 100% of its $5.8 billion acquisition of Korea's Oriental Brewery, maker of Cass Beer.
- Adding such a debt load on top of the billions in debt A-B had after its purchase of Grupo Modelo means A-B InBev is unlikely to meet a promise it made to investors to reduce its debt-to-EBITDA numbers.
- Bringing a bit of a mystery to the debt decision is that A-B InBev has about $7 billion in cash it could have used for Oriental.
Dive Insight:
We have no idea why A-B would borrow at this level. And we share the analysts' sense that the decision is a bit of a strange one. Buying Oriental is probably a very wise move — the CEO alone is worth billions. But we, like the investment community, wish the deal had been closer to a cash transaction.
