God of Corporate Hunting - Chapter 266



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◈ Episode 266: Ambev Brew (3)

Nam Woon-myung flew to New York with Yun Se-bin.

The other party was the beer multinational company Ambevbreu. At Ambevbreu, those who came to the negotiating table were CEO Bart Gent and five executives accompanying him.

On the other hand, Nam Woon-myung’s side had two people, so they were outnumbered. If it’s urgent, should I call the staff at the New York branch?

“There are two major beer companies in Korea. We have a lot of connections with Korean beer companies.”

The atmosphere continued to soften as Gent eased its ties with Korea.

Ambebrew has a history of buying Korean beer companies, selling them when they had liquidity problems, and then buying them again at a higher price. It maintains a policy of freely buying and selling depending on the company’s business outlook and financial situation.

Therefore, the sale of Corona beer can also be understood as a result of their tendency.

They said they are selling Corona beer because their financial situation is currently in a difficult situation and a better company has emerged to acquire them. On the other hand, there is a possibility that they will buy it back later if their financial situation improves or the company’s outlook brightens.

“At that time, we bought it back in Korea for $5.8 billion, which was about three times more expensive than the price we sold it for five years ago. People were saying that the sale and repurchase were crazy… but in reality, we also made money by acquiring other companies, so it was a win-win situation for both sides.”

Ghent’s explanation continued.

The deal at the time was considered a landmark achievement in the private equity industry.

It proved that while it is important to buy a company cheaply, it is more important to restructure the company and increase its value.

“Looking at the track record of Korea Asset Management so far… it’s amazing, so I can trust them with this transaction as well.”

Nam Woon-myung listened to Hent’s explanation silently.

It wasn’t really a deal, but rather a retrospective chat about the past, so it was enough to match the rhythm.

Yoon Se-bin also maintained a similar attitude.

“We also know that Ambev Brew has grown through M&A. The preferred beer taste varies slightly from country to country, and the strategy of diversifying the brand to suit this has worked well. We believe that there is a lot to learn from this.”

Only after we had a pleasant conversation with each other did we get to the main point.

“So… I’m trying to sell Modelo, the Mexican beer maker of Corona. As you know, sales have plummeted due to the brand name. I think it’s going to take a long time for people to forget the negative image of Corona.”

“You’re saying that sales recovery is clear, but it’s hard to wait?”

“Yes, it’s probably not a losing trade.”

On the surface, yes. It’s still incredibly undervalued.

Nam Woon-myung and Yun Se-bin also agreed on this fact.

“So how much do you want?”

“It’s $2 billion. It was once valued at $4 billion.”

$2 billion is a reasonable price considering the size of the North American market, including Mexico.

“If you calculate it at $2 billion, the EV/EBITA is 12, right? You’re calling it cheaper than expected?”

“There must be a reason it’s cheap, right?”

There are many conditions attached when transferring a company to a private equity fund.

What are the conditions that are advantageous to selling cheaply?

“First of all, there is a call option attached. There needs to be a clause that says Ambev Brew has priority if you sell within 5 years. Or, if Ambev Brew requests to buy it back, you have to agree to the deal.”

Call options are a common clause, so we expected that.

“Is that all?”

“No, there is more. I would like to have an earn out clause as well.”

Earn-out is a post-settlement provision. It is a provision that shares a portion of the profits if the private equity fund later sells the company and makes a profit.

By keeping this clause, Ambev Brew can collect a portion of the profits in the future even if it sells it cheaply.

“How much do you want?”

“It’s 20%.”

If Korea Asset Management buys Modelo for $2 billion and sells it for $3 billion, it will have to pay back $200 million, which is 20% of $1 billion.

Considering the current low prices, this is not an unreasonable request.

Gent finished with a big smile.

“As you know, we have done a lot of M&A. So we don’t do push and pull. We offer the most reasonable price, and if the other party doesn’t accept that price, we stop negotiating. You know what I mean?”

He made it clear that he would never back down from the $2 billion and two demands.

Nam Woon-myeong also agreed because he had no intention of colluding to save a penny or two.

“great.”

“Please go back and review it, and if you are interested in trading, please contact me.”

The meeting is over.

Nam Yun-myeong asked as he left his seat.

“Why Korea Asset Management?”

“As I said, it’s because we have the money and we’re good at investing. We have confidence that we won’t ruin the business we sold.”

“Is there any company to negotiate with?”

“Of course I do. The problem is that I don’t like it as much as you guys. Haha.”

The technique of reaching an agreement by heaping praise on the front was really reliable.

* * *

Nam Woon-myung and Yun Se-bin stopped by the New York branch to review the acquisition.

Just as no deal can be unilaterally good, this deal had its pros and cons. Above all, the low price was attractive. Another advantage was that it had a solid market in Mexico.

However, there is a question mark over whether this brand can stand up in the future, because no one has ever experienced something like this.

Sun Yoon-ah and Dan Kirk also had the same opinion.

“If I had a lot of money, I would invest it, but it wouldn’t be my top priority.”

Seon Yoon-ah expressed her reservations.

“The brand image is good in North America. At least before COVID. I didn’t know COVID would have such an impact.”

Dankirk also expressed doubts.

In this matter, Nam Yunming also had difficulty demonstrating his abilities.

This is because I did not meet with the management of Corona Beer, but rather with its parent company. Since there is no one to gauge the future of this company, there is no way to predict its fate.

“Wouldn’t it be difficult to buy this company if not now?”

“Yes, fortunately, we have enough money to buy this company.”

Yoon Se-bin made a promise.

“And there’s no negotiation to lower the price?”

“The price is worth it.”

“So where can we get additional profits?”

There was no way to get it. As expected, it was Ambev Brew, the master of mergers and acquisitions.

Coming here, this is the first negotiation.

“Let’s take our time analyzing it. We might see something new when we look at it again tomorrow.”

Nam Yun-myeong concluded his comments and ended the meeting.

I was about to eat dinner when the phone rang.

It was Avery Grant.

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Why at this time? How did he know he was here?

Nam Yun-myeong apologized, went out alone, and answered the phone.

“Yes, this is Nam Un-myeong.”

[You came to New York?]

“Is that so?”

[Now that you’re here, would you like to come to KR Investment Group?]

“Is this an invitation?”

[is it so.]

“We’re not even close…….”

[Oh, that would be disappointing. I’ll be waiting.]

A stalker? You know where he is. Everly’s information power is amazing.

I was curious about how a major private equity fund works. There was no reason to turn down the invitation.

More than anything, he was curious as to why Everly kept contacting him.

There is no such thing as an unreasonable favor.

After accepting the visit, Nam Woon-myeong hung up the phone.

It is better to worry after knowing the other person’s true nature than to worry without knowing anything.

“Do you happen to know where the KR Investment Group headquarters is?”

As expected, it was a famous place, so many people knew about it.

“It’s across the block. Next to the city bank.”

“I guess I can walk there.”

When Nam Woon-myung finished preparing, Yun Se-bin asked.

“Why are you leaving?”

“Avery wants to meet with KR Investment Group.”

“Average?”

Yoon Se-bin also doesn’t have good feelings toward Everly. She was involved with Ashur, and more than anything, she found it difficult to treat him well because he was rude.

“Then I’ll go with you.”

When Yoon Se-bin came forward, Sun Yoon-ah also volunteered. Then, Dan Kirk too.

Nam Woon-myeong earnestly dissuaded the two people and then set off with Yun Se-bin.

* * *

“Welcome. Welcome.”

Everly brought the two into the office.

The entrance, which was renovated with a lot of money, was definitely comparable to the New York branch of Mega Asset Management. In addition, the much larger number of employees and the pleasant office environment clearly showed the dignity of a top private equity fund management company.

“I wonder if the employees will enjoy working there?”

“I’m worried that our employees might want to leave.”

Nam Woon-myung looked around the office, half joking with Yoon Se-bin.

Everly began to brag excitedly.

“KR Investment Group operates 32 offices around the world. The headquarters is in Washington, D.C., and these are branches. Of course, among the branches, the New York branch is the largest. The total amount under management is $90 billion.”

It is so large that it cannot be compared to Korea Asset Management or Mega Asset Management.

A look of contempt was clearly visible on Everly’s face. It was no different from his impression back then.

“We invest heavily in infrastructure related to resources and energy. Of course, we don’t discriminate between industries if the company is good. Our real asset is our investment experts who are spread around the world.”

Yoon Se-bin cut off Everly’s boasting words.

“CSK also has many experts. They are spread out across branches all over the world. And the scale of operations at CSK is much larger.”

“Ah! That insolvent bank that almost went under?”

The argument between Yoon Se-bin and Everly escalated into a heated argument.

In fact, CSK is much larger, although KR Investment Group is a much better company.

The office setting was similar to other private equity funds.

Employees looked at monitors, analyzed companies, and made investment decisions.

Avery guided them into the conference room with a cold expression.

“What about drinks? Wait a minute.”

While Evely left the conference room, Nam Woon-myung asked Yoon Se-bin.

“Why did you call us?”

“Is it because of Mr. Destiny?”

“I think it’s because of Representative Yoon.”

“You’ll know when you see.”

Avery came in with an elderly man.

Nam Woon-myung quickly realized who the person in front of him was.

It was Tony Grant, the head of the KR investment group and Everly’s grandfather.

It was unexpected to meet the chairman of one of the world’s leading private equity funds today.

Nam Yun-myeong examined the other person’s physiognomy, which was his specialty.

As expected, he was a person with an abundance of fortune who would bring in money. Although he had ups and downs in life, he had a smooth later life and was lucky with people, so capable people gathered around him.

As expected, becoming the chairman of a global private equity fund is not something just anyone can do.

“Tony Grant, you’re the CSK representative?”

Grant held out his hand.

Yoon Se-bin also shook hands politely with his counterpart.

“I am Yun Se-bin, co-CEO of CSK. This is…….”

“This is Nam Un-myeong.”

Grant was a gentleman, a handsome old man with a white beard and a polite, if aristocratic, air.

Yoon Se-bin brought up the topic first.

“Thank you for inviting me. But we don’t have any contact with KR Investment Group. What’s going on?”

Grant glanced at Avery and smiled as he answered.

“There were several connections. I heard that he was with me when I met Ashur in the US. Because of that, the Abu Dhabi Investment Authority rejected the raw materials investment. This child suffered from the shock for a while. Please understand.”

Grant answered coolly.

Surprisingly, Grant was more responsive than Avery.

Everly pouted her lips and quietly rolled her eyes.

“So?”

“I have a good investment opportunity. That’s why I brought you here.”

An unexpected proposal came up.

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