Asahi Group Holdings agreed on Tuesday to purchase 5 beer brands in Eastern Europe for €7.3 billion or $7.8 billion from the largest brewer in the world Anheuser-Busch InBev. This is the latest big overseas acquisition by a food and drink member of Japan that continues to struggle at home.
AB InBev put the brands up for sale as part of the successful plan it made to win approval of regulators for its takeover of SABMiller, which was completed during October.
The 5 brands sold, including Pilsner Urquell, give more strength internationally to Asahi, which is a top beer maker in its domestic market but just a small player around the world.
This deal left a few investors upset due to the unexpected high price. Asahi had said earlier it budgeted between $3 billion and $4 billion for acquisitions overseas, but was forced to cough up double that in order to beat out other bidders including Bain Capital a private equity company.
Asahi shares were down in Tokyo by 4.6% after it was reported by Nikkei newspaper the cost of the deal an hour prior to market closing. Shares in AB InBev were up slightly in early trading across Europe.
One strategist in Tokyo said that Asahi was going in the right direction through its expansion overseas, but the deal’s price seemed far too expensive.
Investors said the strategist would now watch to see if Asahi would offer an explanation about the price.
Asahi said the valuation had been similar to its other recent deals involving beverages. The company announced that Pilsner Urquell was at that No. 1 spot in market share in the Czech Republic. On a per-capita basis, the Czech Republic is considered the biggest beer-drinking nation in the world.
Asahi also said that the brands it purchased would establish the company globally.
The deal represents the second biggest on record for the food and beverage industry where a Japanese business is involved after the $16 billion deal Suntory Holdings made to acquire Beam Inc the liquor maker in the U.S. back in 2014.
Asahi previously purchased some beer brands in Europe including Grolsch and Peroni for €2.55 billion that SABMiller was selling to also gain regulatory clearance through divesting.
Beer makers in Japan have actively been looking overseas to find growth due to the local market shrinking, owing to a population that is contracting and becoming older.
Through 11 months of 2016, sales of Super Dry the flagship beer for Asahi were lower by close to 4%.