Kraft Heinz banks on Anheuser-Busch executive in strategy shift

Kraft Heinz banks on Anheuser-Busch executive in strategy shift

(Reuters) – Kraft Heinz Co said on Monday it would replace Chief Executive Officer Bernardo Hees with Anheuser-Busch InBev marketing chief Miguel Patricio, as one of the world’s largest packaged food companies looks to reinvigorate its brands after years of cutting costs dented their value.

FILE PHOTO: A Heinz Ketchup bottle sits between a box of Kraft macaroni and cheese and a bottle of Kraft Original Barbecue Sauce on a grocery store shelf in New York March 25, 2015. REUTERS/Brendan McDermid/File Photo

In February, the Heinz ketchup maker cut its dividend payouts, wrote down the value its marquee Kraft and Oscar Mayer brands and other assets by more than $15 billion and disclosed a regulatory probe into its accounting practices.

The broad sector has struggled with rising transportation and commodity costs along with a shift in consumer preferences to more niche health-focused brands.

The Velveeta cheese maker’s second biggest shareholder 3G Capital has pushed the company to rein in expenses to tackle higher costs and sluggish growth, a strategy it has used effectively at Heinz and Anheuser-Busch, another company in which it has a stake.

3G and Warren Buffett’s Berkshire Hathaway Inc together own more than 50 percent of Kraft Heinz.

“The change at the top of Kraft Heinz is a positive development,” said Roosevelt Investment Group fund manager Jason Benowitz, which previously held a stake in Kraft Heinz.

“It shows that management and the board understand the serious nature of the challenges facing the company. Kraft Heinz … cannot further cost cut its way to prosperity.”

The company’s shares rose about 1 percent in early trading, after more than more than halving in value since H.J. Heinz and Kraft Foods, two of the United States’ biggest food and beverage producers, merged in 2015.

Kraft Heinz has been the worst performing stock on the S&P 500 Packaged Foods and Meats index over the last year, falling some 43 percent.

Patricio takes over the top job in July after spending two decades at Anheuser-Busch, most recently as the Budweiser brewer’s global chief marketing officer.

Prior to AB InBev, Patricio worked at a range of major consumer goods producers including Philip Morris, Coca-Cola Co and Johnson & Johnson.

“By appointing Mr. Patricio as the new CEO, it appears that Kraft Heinz is doubling down on its efforts to reinvigorate the top line,” Bernstein analyst Alexia Howard wrote in a note.

His prior experience as the president of Asia Pacific of Anheuser-Busch InBev might enable him to explore more growth opportunities in emerging markets at Kraft Heinz, she said.

Reporting by Uday Sampath in Bengaluru; Editing by Shailesh Kuber and Saumyadeb Chakrabarty

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Anheuser-Busch InBev adds Citi, BAML to banks working on $5 billion Asian IPO: sources

Anheuser-Busch InBev adds Citi, BAML to banks working on $5 billion Asian IPO: sources

HONG KONG (Reuters) – The world’s biggest brewer, Anheuser-Busch InBev, has added Citigroup and Bank of America Merrill Lynch to the team of banks working on the sale of its Asia-Pacific business, three people with direct knowledge of the matter told Reuters.

FILE PHOTO: The logo of Anheuser-Busch InBev is pictured outside the brewer’s headquarters in Leuven, Belgium February 28, 2019. REUTERS/Francois Lenoir

The two join Morgan Stanley and JPMorgan, both of which are the sponsors, or leads, for the planned Hong Kong initial public offering (IPO) which could raise up to $5 billion for the heavily indebted brewer, the people said, declining to be identified as they were not authorized to speak to the media.

With main markets China and Australia, the region last year made up 18 percent of group volume and 14 percent of underlying operating profit, which in turn rose 13 percent to $3.1 billion. It was not clear how much of the business was up for sale.

AB InBev and BAML did not immediately respond to a request for comment. Citi declined to comment.

The Leuven, Belgium-based maker of Budweiser, Corona and Stella Artois brands aims to spin-off its Asia-Pacific business to reduce leverage, the people said.

AB InBev’s net debt stood at $102.5 billion at the end of December, a figure inflated by its late 2016 purchase of nearest rival SABMiller for around $100 billion. AB InBev wants to bring its net debt/EBITDA ratio to around two times from a multiple of 4.6 at the end of last year. With that goal, it has halved its proposed dividend and said payouts will only grow slowly.

While AB InBev’s shares have risen 19 percent since reporting forecast-beating earnings in February, the brewer is battling to reverse a longer share price decline. Over the past two years, its shares have fallen 24 percent, in contrast to rivals Heineken and Carlsberg, which have gained 15 and 28 percent respectively.

The IPO would not be the first time AB InBev has sold Asia-Pacific assets to reduce debt. After InBev bought Anheuser-Busch in 2008, AB InBev sold South Korean unit Oriental Brewery to private equity firm KKR – only to buy it back in 2014.

The IPO is slated for the second half of the year and the brewer expects to file with the Hong Kong stock exchange in the first half, the people said. One of the people said the filing would happen either later this month or early May.

At $5 billion, the IPO could be the largest in Hong Kong this year, where the flood of companies looking to go public has slowed to a trickle.

Companies have raised $2.9 billion through Hong Kong listings so far this year, lagging the $6.4 billion raised on New York’s Nasdaq, showed Refinitiv data as of Friday.

Hong Kong topped all other exchanges globally last year with stock market listings raising $36.3 billion. This year, however, is widely expected to be slower due to thinning numbers of Chinese companies looking to go public, particularly in tech.

Reporting by Julie Zhu and Julia Fioretti; Additional reporting by Kane Wu in HONG KONG and Philip Blenkinsop in BRUSSELS; Editing by Jennifer Hughes and Christopher Cushing

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Australia’s Lendlease hires banks to run engineering unit sale: sources

BlueMountain names slate for PG&E board

SYDNEY (Reuters) – Australian construction firm LendLease Group has appointed Morgan Stanley and local adviser Gresham to run the sale of its underperforming engineering and services business (E&S), two people aware of the matter told Reuters on Thursday.

The investment banks have sent term sheets to a host or prospective buyers, added one of the sources who spoke on condition of anonymity because they were not authorized to speak to the media.

Representatives for Lendlease and Morgan Stanley declined to comment. Gresham did not return requests for comment.

The Australian developer wants to divest the E&S unit, which Bank of America Merrill Lynch analysts have said could fetch about A$500 million ($355.15 million) in cash proceeds, and focus on its other three units – construction, development and property investments.

In a presentation on Thursday, Lendlease said it expected to take a restructuring hit from the sale of between A$450 million to A$550 million.

LendLease last month reported a 96.3 percent drop in first-half profit, dragged down by the underperformance of the E&S businesses, which was hit by delays and low productivity in a tunneling project in Sydney.

Reporting by Paulina Duran; Editing by Kim Coghill and Rashmi Aich

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