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AB InBev (BUD) to Divest 49.9% Stake in Metal Container Plants

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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, has agreed to sell 49.9% stake in its U.S.-based metal container plants for nearly $3 billion to Apollo-led consortium. The Apollo-led consortium involved in the transaction will include accounts and entities advised by Apollo and its subsidiaries and a group of institutional investors, as announced by Apollo Global Management, Inc. (APO - Free Report) . However, following the completion of the transaction, AB InBev is expected to retain the operational control of the plants under sale and keep the flexibility in its ability to serve its customers.

Moreover, AB InBev has signed a long-term supply agreement as part of the deal to cater to its metal container supply needs through the life of the deal. Also, the company has an option, but is not obligated, to reacquire the minority stake starting from the fifth anniversary of closing the deal, on pre-determined financial terms.

For AB InBev, the transaction is likely to create incremental shareholder value by enhancing its business at an attractive price and repaying debt using the proceeds. Meanwhile, Apollo is likely to benefit from investment in AB InBev’s high-quality assets with long-term growth potential and stable cashflows.

Shares of AB InBev rose 1.2% on Dec 23. Meanwhile, this Zacks Rank #3 (Hold) stock has surged 33.5% in the past three months, outperforming the industry’s growth of 20.7%.



The company has been gaining from improving volume trends. During the third quarter of 2020, total organic volume improved 1.9%, reflecting a sequential improvement from 17.1% decline in the second quarter. Moreover, the company has been witnessing continued strength in premiumization. This coupled with the company’s fundamental strength and continued resilience in the global beer category helped AB InBev to deliver better-than-expected third-quarter results.

Additionally, AB InBev has been investing in new capabilities for several years to better connect with customers and consumers by leveraging technology, such as B2B sales and other e-commerce platforms. Driven by the pandemic, consumers are quickly shifting to in-home consumption occasions, which has led to growth in the e-commerce channel, as well as finding new ways to connect with others.

Consequently, the company is witnessing acceleration in the B2B platforms, e-commerce and digital marketing trends, which has been aiding growth in the past few months. Additionally, the company witnessed acceleration in its proprietary platforms and third-party partnerships in the past several months. In Brazil, Ze Delivery has been gaining traction and is currently present across the 27 Brazilian states.

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The Boston Beer Company, Inc. (SAM - Free Report) delivered an earnings surprise of 23.1%, on average, in the trailing four quarters. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Molson Coors Beverage Company (TAP - Free Report) currently has a Zacks Rank #2. The company has an expected long-term earnings growth rate of 3.7%.

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