'Stars aligned' for AB InBev's megabrew merger plan

Mon Oct 12, 2015 5:55am EDT
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By Philip Blenkinsop

BRUSSELS (Reuters) - Anheuser-Busch InBev's CEO says a study of SABMiller's African beer markets and talks with top shareholders led to an "alignment of stars" that drew it to its nearest rival.

But observers say the real catalysts for the $100 billion takeover proposal made public on Oct. 7 are a steep fall in SABMiller's share price, search for growth beyond AB InBev's declining core Americas markets and a desire not to give SABMiller's new management enough time to execute a workable defense.

Analysts have speculated on the tie-up of the world's top two brewers for years. Chief Executive Carlos Brito told a conference call last week that his company has been eyeing its rival for "quite a while".

In the last few months though AB InBev has done "deep dive" studies of the top nine African markets, which would include SABMiller markets such as South Africa and Nigeria.

AB InBev's larger shareholders, principally Belgian and Brazilian families, have also approached SABMiller's two main investors, cigarette-maker Altria and the BevCo company of Colombia's Santo Domingo family, which together own 40.5 percent of the UK-based brewer.

"Those two things were not the case a year ago, knowledge about Africa and knowledge about the intentions of those two shareholders, in terms of them being at least receptive to an approach," Brito said, while acknowledging that BevCo had not given its support to his proposal.

Target SABMiller has called the approach "opportunistic", timed to take advantage of a double-digit decline in its share price in July and August, depressed by weaker emerging market currencies.

"They saw an opportunity and they jumped on it," said Morningstar analyst Phil Gorham.   Continued...

A barman pours a beer produced by brewing company SAB Miller at a bar in Cape Town, September 16, 2015.   REUTERS/Mike Hutchings