KKR closes in on Oriental Brewery

The global buyout firm reportedly increased its bid for the Korean beer producer to more than $1.9bn and accepted terms such as paying a further $100m if the company’s EBITDA tops estimates two years after the sale.

The world’s largest beer company Anheuser-Busch InBev has chosen Kohlberg Kravis Roberts as the preferred buyer for South Korea’s Oriental Brewery, said a source close to the firm. KKR and Oriental Brewery declined to comment.

KKR reportedly raised its bid to more than $1.9 billion and accepted most of InBev’s demands such as paying an additional $100 million if Oriental Brewery’s EBITDA surpasses estimates two years after the sale, a source told Korean news website Money Today.

Oriental: $1.9bn target

Asian buyout firm MBK Partners, which was also in the running for Oriental Brewery, reportedly submitted the highest offer.

Besides KKR and MBK Partners, other shortlisted buyers for the company included buyout firm Affinity Equity Partners, Korean retail conglomerate Lotte Group and global brewing major SABMiller.

KKR was backed by banks including JPMorgan, Standard Chartered, HSBC, Calyon, ING Bank, Natixis and Nomura, according to Reuters.

MBK Partners and Affinity did not respond to requests for comment at press time.

A total of about 10 bids were submitted in the first round of the auction, including those from private equity firms Bain Capital and The Carlyle Group.

InBev owns a majority position in Oriental Brewery. The company is reportedly looking to sell its non-core assets to repay a $7 billion bridge loan related to InBev’s $52 billion buyout of US-based Anheuser-Busch in 2008.

Established in 1952 by Korean conglomerate Doosan Group, Oriental Brewery was acquired by InBev in 1998. The company currently produces beverages including the OB, Cass and Cafri lager brands.

JPMorgan and Deutsche Bank are running the sale process.