Friday, September 18, 2015

AB Inbev has to convince two shareholders

At a Conference of the brewing sector held last year in Arizona, a journalist asked Alan Clark if it would be feasible to Anheuser-Busch InBev (AB Inbev), a high purchasing power and the largest brewer in the world, attempting to acquire the SABMiller, the second largest.
"You can put the numbers to work," said Clark, who had assumed there were nine months the Office of the Chief Executive of SABMiller. "There would be a loss of value and a destruction of value because they know they would have to sell operations in the u.s. anyway," he added, with a frankness unusual for a top executive.
Do the numbers work is exactly what's going to determine whether SABMiller's shareholders agree to a takeover, after the company had been approached this week by AB InBev, maker of Budweiser beer. The terms of the deal – which can create a $ 275 billion-have not yet been revealed.
It should be stressed that the AB InBev will not have to make many visits to the SABMiller shareholders because 42% of the company is in the hands of only two investors. For AB InBev, convince the Altria-American tobacco manufacturer, which owns 27% of the share capital of the parent company, and the billionaire Colombian Family in Santo Domingo, with 15%, on the merits of the business will have more than half the battle.
AB InBev shouldn't overlook the views of their own shareholders. "Today's price action, the business does not work for me because I will add value. There will be only small gains, which doesn't make a deal worthwhile, "said one of the 50 largest investors of AB InBev.
SABMiller has become a target for several reasons. First, there is the impulse of the trio of major shareholders of AB InBev-Brazilian Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira-, you see acquisitions as a growth engine.
All three have experience in private equity and are also the co-founders of 3 g Capital Partners, the investment firm that has been buying assets of the food sector in the United States, such as Heinz and Kraft.
Secondly, the AB InBev is a great company, with annual revenues of $ 45 billion, so she needs a substantial acquisition to earn even more scale. Such opportunities are rare: the three brewers that are just below the AB InBev-SABMiller, Heineken and Carlsberg-SAT is the only potentially available for sale.
Heineken has family control and refused an attempted acquisition of SABMiller last year, while Carlsberg is protected by a foundation. The exhibition of this Danish maker of beer to the volatile Russian market, which has been affecting the profits, not makes it attractive for AB InBev.
Strategically, analysts believe SABMiller is a good option for Belgian-Brazilian brewery because more than 70% of your sales are made in emerging markets. This profile complements the slope like the AB InBev for the Americas.
In addition to the United States and China, there is little significant territorial overlay, which may explain in part why SABMiller for a long time has been the target of rumors by AB InBev purchase.
The timing also has its share. Before the confirmation of the approach, SABMiller's shares were trading at a 21% lower price to 37.68 pounds, the highest level registered last year. They have risen in part because of rumors that the AB InBev would try to close the deal.
Since then, the action fell, following the downgrades emerging markets, making the company more accessible for AB InBev. "It may also be that the controlling shareholders of AB InBev believe that big drop in emerging markets is being excessive, especially with regard to the exchange rate, and that gains in the dollar, and thus the price of their action, are artificially depressed," said Trevor Stirling, analyst at Bernstein. "In short, the timing is good for the purchase of assets from emerging markets."
AB InBev will attempt to extract significant synergies-Robert Ottenstein, an analyst at Evercore, estimated at up to $ 2 billion-via a link with SABMiller, and scale of the new brewing group might give her a greater purchasing power in the market of beer.
"We don't see how SABMiller can defend himself from plausible way of AB InBev's approach in a way that adds more value for shareholders," says Andrea Pistacchi, analyst at Citigroup. (Translation of Mario Zamarian)
Valor Economico
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