14/10/2015

Inbev conquers Sab Miller on the fifth bid

On the fifth bid, Jan du Plessis at the head of Sab Miller and Carlos Brito, Anheuser Busch InBev CEO, shook hands. Thus the world’s largest beer group came to life, able to control one third of the “pale, stout and lager” products consumed in the world. This take-over has a nostalgic feel for us Italians: Peroni is moving on from Sab Miller to the new parent company giant AB InBev manufacturer of Bud and Corona. The French manager of the British beer group, take-over prey, was successful in negotiating continuous upward adjustments to reach the 44 pounds per share in cash, value just over the 39 pounds reserved to those who choose the mix option, made up of cash and share swap.

source: Il Sole 24 Ore date 14.10.2015

A deal worth about 70 billion pounds, more than 100 billion dollars, ranking third highest financial transaction ever, beating out Aol-Time Warner. For Sab Miller shareholders, this means a 50% premium over September 14 market listings when rumours started to fly on the world’s largest lager manufacturer’s moves. Gigantic numbers for a group destined to write the ending to the history of beer business, at least as we’ve known it to date. The meeting between Peroni and Corona is, in fact, the merger between the first and second. THE PRICE HIKE For Sab Miller shareholders, the 44 pound bid means a 50% premium on the world’s “beer maker” September 14 market listings with 30% of the market. The closest competitor will be Heineken who holds no more than 9%: for this reason some are not betting on the final results of the deal. Antitrust authorities throughout the world will have to sound out the transaction, but Jan du Plessis has already safeguarded himself. Should the merger fall through due to regulators or ABInBev board objections, the British group with South African roots will be compensated with 3 billion dollars. The risk of being accused of a monopoly is actually marginal since the geographic penetration of the two beverage giants does not radically overturn the market. Rather, the deeper meaning that AB-InBev truly intended is found in Sab Miller’s penetration in Africa, the new frontier for business and breweries. Carlos Brito’s corporation, strong in the Americas, Asia and Europe is, in fact, weak on the African continent where Sab Miller was founded and where a growing middle class, meaning potential consumers, is consolidating. According to sector analysts, however, some disinvestments are inevitable starting with the MillerCoors joint venture in which Sab Miller holds shares and strong in the United States where the new industrial group would hold more than 70% of the market. The deal was promoted by the idea of a share swap that attracted the Altria Americans, the single majority shareholder in Sab Miller with 27%. A method that provides significant tax savings and that will probably also be chosen by the Santodomingo family, the second largest shareholder. Both Altria and Santodomingo’s seats on the super brewery board should be in the bag. The British take-over panel requires a decision by Wednesday, extended to the end of the month now that parties have reached an agreement. The board of directors should give their OK by October 28th, launching the regulatory process that will last at least one year. At the same time, the new group will launch their business plan which, according to analysts, will not include staff cuts. Sab Miller operates in 80 countries with seventy thousand employees and global sales for 26 billion dollars. AB InBev posts around 47 billion dollars in revenue, but has more than 150 thousand employees on payroll throughout the world. Figures that make radical reorganisation inevitable.

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