Analysis

Anheuser-Busch InBev appears to be considering a sale of some of its assets following its decision to call off the IPO of its Asian business. The decision comes on the heels of scraping its Asia IPO. Still, Anheuser-Busch hasn’t lost its sense of humor. Rather than dwell on the IPO loss, it instead decided to have some fun with its Bud Light brand in regards to the viral “Area 51” story:

The Greatest Beer Company in The World

Anheuser-Busch is the owner of over 500 brands including Budweiser, Corona, Stella Artois, and countless other names spread throughout the world. Now the company may be looking to unload Central American, Australian, and South Korean assets in order to trim its debt load.

The IPO had been targeted to raise close to $10 billion. Anheuser-Busch carries about $105 billion in debt, which costs it some $4.5 billion annually to service and which is almost a quarter of its operating income.

Aliens Are Great Brand Ambassadors

Tweets like these are what help define the Budweiser and Bud Light brands, and that is the key to Anheuser-Busch’s long-term success. Alcohol is a great business and – despite Anheuser-Busch’s debt-heavy acquisition spree that helped it remain competitive – it generates enormous and regular free cash flow.

Anheuser-Busch had over $9.5 billion in free cash flow last year, and it often exceeds $10 billion.

Unlike certain dumb companies that get involved in blockchain, Anheuser-Busch sticks to its knitting.

Beverage tastes are constantly in flux, and Anheuser-Busch has done an exceptional job is making deals that allow it to remain relevant and competitive. The humor associated with the Bud Light brands and other marketing campaigns for its other brands has always been brilliantly executed.

Bud Light has always created that desired emotional connection from consumers as a result of its humor.

A Solid CEO With a Vision

CEO Carlos Brito understands the reach that beverages have throughout the world.  One look at the success outside of Anheuser-Busch and at other legacy companies like Coca-Cola and Pepsi demonstrates the unlimited potential of beverages.

Travel to the outermost reaches of the planet, and it’s a guarantee you will find Coke.

Alcoholic beverages are the same, and there’s still further to go.

Meanwhile, the U.S. market continues to evolve. Consumers are drinking less beer, but they are paying more for it. There’s discrimination going on in the beer market as premium tiers are starting to emerge, and the company taps the enthusiasm for craft beers via strategic acquisitions.

That all means higher margins for Anheuser-Busch.

Disruption in Beverages

Over in Canada, Anheuser-Busch is partnering with Tilray in a $100 million joint venture that will explore using cannabis-infused non-alcoholic drinks. This is yet another massive untapped market that Anheuser-Busch can exploit – not only in Canada but likely globally. And cannabis continues to be legalized.

Flavored beverages and ciders are growing. Carlos Brito looks for disruptive approaches to existing products, and he’s succeeding.

Anheuser-Busch is slated to grow earnings at about 11 percent annually over the next five years. Although the stock is priced at about 20x earnings, long-term investors who have no exposure to a legacy alcohol company might want to consider the stock.

After all, aliens might drink beer, too.

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