Korea: KKR imbibes Oriental
"Some of them had seen Barbarians at the gate so we were a little nervous as to how they would react to the news that KKR had won," says a banker advising Anheuser-Busch InBev on its sale of Korea’s Oriental Brewery to KKR.
The US-based buyout firm starred in the book and film of the same name detailing the notorious RJR-Nabisco buyout that kickstarted the mega-LBO trend of the 1990s.
Yet despite any potential misgivings on behalf of either ABInBev or Oriental Brewery, KKR beat foreign and domestic competition to buy the Korean beverage maker, which forms one half of the country’s beer duopoly.
The $1.8 billion deal raises much-needed cash for Belgium-headquartered ABInBev, with the terms allowing the seller to repurchase its prized Korean asset for 11 times ebitda in five years.
The deal is KKR’s first in Korea, and the firm beat out a double-digit number of bids deemed serious by the vendor, according to one sell-side banker on the deal. Some of those competing bids were, the source said, for higher total amounts than the KKR offer.
The buyout firm’s ability to raise funds through a combination of its own capital (syndicating half the risk to a partner) and loans provided by the seller and a syndicate of banks proved a decisive factor.