SOUTH AFRICA – A weekend report that SABMiller was in the sights of investors linked to a larger rival buoyed shares in the brewer, even as analysts said the rumours were a rehash of last year’s speculation.
Britain’s Mail on Sunday said Brazilian investment firm 3G Capital was considering a £75bn bid for SABMiller, whose shares on Monday closed up 2.14% in London and 1.14% on the JSE.
The paper cited an anonymous source saying 3G Capital had been studying how it could buy SABMiller with consortium partners, but said the plan was still in its early stages and no formal approach had been made.
3G Capital owns 21% of the world’s largest brewer, Anheuser-Busch InBev (AB InBev), and its founding partners serve on AB InBev’s board.
The bid would be a 32% premium to SABMiller’s market value of just less than £57bn.
SABMiller’s share gains were more muted than after a similar report by the Wall Street Journal last September when its shares jumped nearly 13%.
The Wall Street Journal had also reported a possible £75bn takeover of the company by AB InBev, which was reportedly talking to banks to arrange financing for the deal.
Talk of a tie-up between the world’s two largest brewers has been simmering for years, with sporadic reports of imminent consolidation lifting shares across the sector at least twice last year.
Heineken said in September it had rejected a takeover proposal by SABMiller.
Some analysts believed SABMiller was attempting to put itself out of AB InBev’s reach, though SABMiller denied this.
Asset manager Vestact said in a note to clients on Monday that while a £75bn bid “sounds like too much”, offering a hefty premium might be the only option to entice SABMiller shareholders.
SABMiller’s two biggest shareholders, Altria Group and BevCo, collectively hold just less than 41% of the company’s stock.
Vestact said that the weekend report appeared to be “an old story resurfacing”.
Another analyst said that while there could be merit to speculation of consolidation, the latest report seemed to be “thinly based”.
Bank of America Merrill Lynch said that any 3G Capital bid would have to include AB InBev since the Brazilian investment company owned 21% of the brewer, according to Bloomberg.
With SABMiller’s emerging market focus complementing AB InBev’s largely mature market footprint, the combination would boost earnings, the investment bank said.
But it added that there were less obvious synergies than the companies’ past mergers, partly due to cultural differences.
Barclays said last year that an AB InBev-SABMiller deal was not likely to be as compelling as AB InBev’s previous acquisitions, given more limited cost savings, a longer payback period and greater execution risk.
Meanwhile, Reuters last week reported that SABMiller was considering buying a stake in Myanmar’s biggest brewer, Myanmar Brewery.
SABMiller’s policy is not to comment on market speculation.