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ThaiBev Beer Brewery Pre-IPO/Spin-Off - Valuation Estimation and Implications

Thai Beverage (THBEV SP) announced in November 2019 that it is potentially looking to spin-off its beer brewery operations, which mainly consisted of its Thailand and Vietnam beer assets. The unit will be looking to list on SGX and will potentially raise over US$2bn, valuing it at about US$10bn, according to news reports.

The listing will likely encompass THBEV’s Thailand brewery operations, which include Chang Beer, Archar and Federbräu, and its majority-owned and listed Vietnam subsidiary, SABECO, which sells Saigon and 33 Beer.

Our valuation of THBEV’s beer brewery unit puts it at an EV of US$7.2bn and a market cap of US$2,320m, which will unlikely raise anything close to the rumored US$2bn deal size according to news reports.

To achieve the deal size, THBEV will likely have to restructure and move the SABECO acquisition debt into the parent leve (THBEV)l. The resulting effect will be that the beer brewery unit will be valued at a market cap of US$7.1bn, which brings up the potential deal size to about US$1.7bn, closer to the rumored size.

In this note, we will look at the potential valuation of THBEV’s Beer Brewery unit and the assumptions we used to derive the valuation.