USA: SABMiller could be listed on NYSE

Talk that brewer SABMiller could be considering a New York listing is doing the rounds in the marketplace, Business Day reported December 13. Retail analysts say there are several strategic advantages for such a listing, such as allowing the company to raise capital and increase its profile in the US market.

SABMiller director of corporate affairs Sue Clark said there were no plans for a US listing. However, the group had grown its US shareholder base in the past few years, which now accounted for about 20% of the free float.

The world’s second-biggest brewer is listed on the Johannesburg and London stock exchanges .

Chris Gilmour, an analyst with Absa Asset Management Private Clients, said a listing on the New York Stock Exchange (NYSE) made sense as there were several drivers in place.

If the company sought to do a large acquisition, of which there were only a few left, a US listing would provide it with a platform to raise capital. Also, a US listing would raise its image in the US and reassure American investors that it was a company that complied with US governance standards.

SAB MD Tony van Kralingen previously said there was a need to reassure US investors and public that SABMiller was not a “barbarian at the door”.

After its joint venture with Molson Coors, the company had become the second-biggest brewer in the US and had about 30% of the market.

In October SABMiller and Molson Coors announced the venture that combined their US operations and boosted their competitive position against number one US beer player Anheuser-Busch.

Gilmour said this made SABMiller a significant US player and could spur on a listing to further boost its image .

In addition, should US tobacco group Altria divest its 29% stake in SABMiller, the company would need a platform that was acceptable to US investors because London-listed shares might not be viewed as desirable by US shareholders. Altria had been divesting noncore assets such as food business Kraft and cigarette company Philip Morris International.

Gilmour speculated a listing was likely to happen next year. He said the brewer already had a level-one American Depository Receipt, an over-the-counter share it had for some time. Level two was a full listing on either the NYSE or Nasdaq, and level three allowed companies to undertake a capital-raising exercise.

Grant Swanepoel, an analyst with Barnard Jacobs Mellet, said the cost of Securities and Exchange Commission filings could put SABMiller off a New York listing, especially if the listing did not serve a purpose, such as capital raising.

He said that while Altria might unbundle its stake in the brewer, this might not make sense as capital gains tax would eat away as much as 25% of the value of its stake. As such, a listing to facilitate the unbundling would prove costly. However, after SABMiller’s joint venture with Molson Coors in the US, it would make sense for US analysts to cover the stock. But, as it is not listed in the US, there would be less benefit for analysts to do so, leaving the stock covered mainly by UK analysts.

14 December, 2007