Anheuser-Busch InBev (NYSE:BUD) won crucial conditional approval from Australian antitrust regulators for the sale of its Carlton & United Breweries to Japanese brewer Asahi (OTC:ASBRF)

The mega brewer is unloading its Australian business in a bid to help lower its massive debt load, and now just needs the country's foreign investment regulators to sign off on the deal.

After Anheuser-Busch's acquisition of SABMiller in 2016, its debt surged to $104 billion and the brewer began shedding assets to raise money to reduce the amount. It spun off its Asian business last year.

Friends drinking Yak beer brand

Image source: Carlton & United Breweries.

Give a little to get a lot

In order to gain regulator approval for the acquisition, Asahi agreed to sell the Stella Artois and Beck's beer brands, as well as the Strongbow, Bonamy's, and Little Green cider brands.

Anheuser-Busch acquired Carlton & United when it bought Miller, so it seemingly has no real attachment to the business, and Asahi already owns the top-selling cider brand in Australia, Somersby. Regulators said Asahi would control 71% of Australia's cider market with the purchase.

They also feared the deal would reduce beer competition because Asahi was an effective check on both Carlton and Mitsubishi's Lion beer, which would be diminished if it acquired Carlton.

While the $11.3 billion deal would help lower Anheuser-Busch's debt, the brewer just maxed out its credit limit by drawing down the full $9 billion amount it had on the facility. 

As the coronavirus pandemic worsened, Anheuser-Busch wanted to ensure it had sufficient liquidity available to it during the downturn. Although it looks like a case of two steps forward, one step back, the Australian brewing business sale is still expected to be completed by the second quarter of 2020.

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