(The following statement was released by the rating agency)
April 16 - Ambev's agreement to acquire 51% of Cerveceria
Nacional Dominicana S.A. (CND) through two transactions for about $1.2 billion
in cash plus the contribution of Ambev's assets in the Dominican Republic, is
seen as a strategic positive by Fitch Ratings.
The structure of the transaction, which includes various put and call options,
should allow Ambev to eventually own more than 90% of CND.
Fitch notes that Ambev has a great track record of integrating acquisitions and
increasing the profitability of the acquired companies through a variety of
initiatives that increase volumes and revenues per hectoliter, while lower per
unit costs. CND should also benefit greatly from the expertise Ambev brings in
terms of improving operating profits.
Near term, Ambev's credit quality is tied to its parent Anheuser Busch-InBev
NV/SA (ABI, rated 'A-' with a Stable Outlook by Fitch), which continues to
deleverage. Ambev generated about BRL9.6 billion of EBITDA during 2011. The
company ended the year with a net cash position of BRL4.2 billion. During 2012,
Ambev was expected to lower its net cash position through a combination of
dividends, interest on capital and acquisitions. These current transactions are
in line with Fitch's expectation for Ambev's use of free cash flow during 2012.
Including the assets to be contributed by Ambev, CND's businesses include beer,
malt and soft drinks operations in the Dominican Republic, Antigua, Saint
Vincent and Dominica, as well as exports to 16 other countries in the Caribbean,
the United States and Europe. The pro-forma estimated EBITDA for the combined
operations is about $190 million.
Fitch currently rates Ambev as follows:
--Foreign currency Long-term Issuer Default Rating (IDR) 'A-';
--Local currency Long-term IDR 'A-';
--Unsecured notes due 2011 and 2013 'A-'.
The Rating Outlook for all of the aforementioned ratings is Stable.
(Caryn Trokie, New York Ratings Unit)