The $52 billion merger of Anheuser-Busch InBev has resulted in some nice opportunities for private equity firms. For example, KKR recently purchased a division of the firm -- Oriental Brewery Co. (the number two brewer in South Korea) -- for $1.8 billion.
Doesn't sound like a lot? Well, it is a big deal. In fact, it's the biggest private equity deal in nine months.
Of course, a big reason for the fall-off in deals has been the credit crunch. So, to handle this predicament, KKR actually was the lender on the transaction. You see, the firm will allow Anheuser-Busch InBev to essentially repurchase Oriental Brewery within five years (at a set valuation). In other words, it's a clever way to provide financing -- and hand over much-needed cash to Anheuser-Busch InBev.
Interestingly enough, this structure could be more common (especially as credit conditions remain rough). And, it will be an effective way for private equity firms to leverage their huge cash hoards, which are estimated at over $500 billion (according to Bloomberg.com).
Tom Taulli is the author of various books, including The Complete M&A Handbook
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