London/Brussels, Jan 23 - ABInBev's shares have jumped 80 percent in the two months since becoming the world's biggest brewer, but further gains depend on making disposals to ease worries about paying for the largest-ever cash takeover.
Shares in the newly-named Anheuser-Busch InBev rose after it raised bond finance, completed a rights issue and started cutting costs.
Analysts are now looking for disposals such as its German Beck's business to drive the shares further.
The brewer of Budweiser and Stella Artois, formed from InBev's takeover of Anheuser-Busch, needs to pay back $14 billion debt by November 2010, and analysts hope news of disposals in 2009 may be a catalyst for the shares with little good news seen on the trading front.
"The market is relieved that the short term financing issues have been removed. For the next leg up in the shares we would need to see some news on divestments," said Dresdner Kleinwortdrinks industry analyst Simon Hales.
Key to the shares revival was the successful placing of $5 billion worth of bonds which cut a loan due by November 2010 from $19 billion and halved the refinancing needs for this year. The company also moved to cut jobs to hit its cost savings targets.
The amount may be further reduced as ABInBev priced a new multi-tranche bond for a total of around $2.5 billion on Thursday saying the proceeds will be use to repay short-term debt and outstanding debt from its Anheuser acquisition.
"They have steadily reassured on virtually all items," said analyst Trevor Stirling at Bernstein, adding that the recent $5 billion bond issue had taken a lot of pressure off the company.
A few days after InBev sealed its $52 billion purchase of the Budweiser brewer in late Nov. 2008 its shares slumped to a five-year low of 9.96 euros, dramatically down from a high of 43.12 in Oct 2007 before rumours of a deal started to emerge.
Shares in the Belgium-based ABInBev, which is two-thirds controlled by the Belgian Interbrew families and three Brazilian shareholders after the Interbrew-AmBev merger of 2004, were trading off 0.5 percent at 17.94 euros by 1400 GMT.
The shares' November nadir was caused by concern over how ABInBev would pay for the deal with credit markets difficult and world economic growth slowing, while a planned rights issue to raise $9.8 billion was done at a rock bottom price.
The equity issue at 6.45 euros a share was completed in December, but only at a massive discount to a share price of over 21 euros in October when the brewer delayed an offer due to "unprecedented volatility" in capital markets.
But once the rights was completed, ABInBev was quick to start tackling its massive $45 billion loan. With the bond issue earlier this month, it now needs $3.5 billion from divestments by November, rather than the $7 billion originally planned.
"We see the stock consolidating around the 20 euro level in the medium-term until we receive further news on the disposal process," said analyst Ian Shackleton at Nomura.
ABInBev's Brazilian Chief Executive Carlos Brito has said the brewer has earmarked five non-core assets for possible sale, and might reach a $7 billion divestment target by selling two or three, but the recent bond issue has surely cut that target.
Analysts say these five could include Anheuser's U.S. theme parks, including SeaWorld and Busch Gardens, its packaging business and a 27 percent stake in China's Tsingtao Brewery Co Ltd , in addition to InBev's Korean brewing and its German brewing business.
Bernstein's Stirling has put a price of up to $2 billion each on the theme parks and German breweries, up to $3 billion on Korean brewing and up to $1.5 billion on packaging, with some saying the Beck's German operation may be first to sell.
Market talk emerged last November that German brewer Radeberger, owned by the unlisted Oekter group, is interested in acquiring the German operations which include Diebels and Spaten brands as well as Beck's.
A private buyer may find it easier to finance a deal in the current climate which could lead to ABInBev holding the overseas rights to Beck's, analysts said.
But some were more cautious concerning the disposals and short-term trading concerns.
"They still need $3.5 billion by the end of November. It's a sizeable amount. That's an uncertainty," said Marc Leemans at Bank Degroof, who is cautious ahead of 2008 earnings on March 5, with weak trading seen in Russia, Ukraine and Brazil.
He says ABInBev now trades on a similar rating to nearest rivals SABMiller Plc , Heineken , but should trade at the premium long-term given the scale and mix of its business.
The company had promised to cut $1.5 billion in costs from the combined group by 2011, and most analysts believe ABInBev will comfortably hit the target given its reputation as a cost cutter.
In December, it said it will cut 1,400 jobs in the U.S., largely at Anheuser's headquarters in St Louis, and in January it announced the closure of Anheuser's London brewery with the loss of 182 jobs, while some Belgian jobs are also at risk.