Windhoek
The announcement of the blockbuster buyout of the world’s second largest brewer, SABMiller, by Anheuser-Busch InBev has regulators and the beer industry scrutinising the possible ripple effects of the merger.
The South Africa’s National Treasury was the first to go on record that it could “in the extreme” try and block the US$109 billion takeover of SABMiller, but would first wait to assess the possible effects of the takeover.
“We subject those applications to subjective criteria – the likely impact on capital account, the impact on the tax base and the possible complications,” the treasury’s director general Lungisa Fuzile told Reuters.
It is not yet clear how the merger would impact Namibia, a market in which SABMiller has for long been kept at bay by Namibia Breweries Limited through joint-ventures of its own, as was the case with Heineken recently.
SABMiller has just opened its first ever brewery at Okahandja, 65 km north of Windhoek, in partnership with local black empowerment groups. Previously, SABMiller’s local distribution plant could not even issue returnable beer bottles in the Namibian market.
SABMiller yesterday said “the boards of AB InBev and SABMiller announced that they reached agreement in principle on the key terms of a possible recommended offer.”
Under the terms of the possible offer, SABMiller shareholders would be entitled to receive GBP 44.00 per share in cash, with a partial share alternative available for approximately 41 percent of the SABMiller shares,” the company said.
SABMiller is listed in London with a second listing on the Johannesburg bourse. It became SABMiller after the original South African Breweries (SAB) went on a more than decade-long shopping spree, first in South Africa, before it turned onto the small breweries in the neighbouring countries, from the Portuguese relics of Cervejas de Mocambique with its Impala beer and Brewery N’Gola in Lubango, Angola, buying the N’Gola beer. From there SAB turned to the world, from China, Hungary to Mexico and USA, where it became SABMiller after buying the Miller brand.
If the recent acquisition goes through it would create a humongous world brewer, brewing almost a third of the world’s beer and would rank in the top five mergers in corporate history. Including debt, the cost of buying SABMiller is around US$117 billion, making it the world’s third biggest takeover after two mega mergers across the telecoms sector.
The company that struck the deal with SABMIller is Belgian-Brazilian group AB InBev, the maker of Budweiser and Stella Artois lagers. SABMiller added that its board “would be prepared unanimously to recommend the all-cash offer of £44.00 per SABMiller share” to its shareholders.
While most companies’ share prices were in the red Tuesday following weak Chinese data, SABMiller soared 8.56 percent to £39.31 and Budweiser maker AB InBev won 2.0 percent to 100.40 euros. SABMiller, which also makes beers Peroni and Pilsner Urquell, claimed the previous bids had undervalued the company.
The brewing sector is looking at consolidation faced with the increased popularity of so-called craft beers that are brewed by smaller independent firms.
AB InBev recently reported a sharp fall in second quarter profits owing to weak economic conditions in several markets. In order to firm up its business, SABMiller earlier this year bought London-based craft beer company Meantime for an undisclosed sum, as big players in a saturated beer market eye opportunities in the fast-growing segment.
Elsewhere, Dutch beer giant Heineken has bought half of US-based beer maker Lagunitas, hoping to cash in on the rocketing global popularity of craft beers.
– Additional reporting by AFP & Reuters