E-Malt.com News article: World: SABMiller’s bid for Heineken shows brewers retain thirst for growth

Any doubt about SABMiller chief executive Alan Clark’s appetite for deals were erased with his bid for Heineken, Bloomberg said on September 26.

Clark’s preliminary offer – rejected by Heineken, the maker of a namesake lager, Amstel and Newcastle Brown Ale – could stimulate an industry poised for a new round of consolidation.

Just a year ago, Clark said deals were less important than growing SABMiller’s brands such as Peroni and Castle Lager. His hand may be forced by an even thirstier competitor: Anheuser-Busch InBev.

“The SAB culture is one of progress and advance,” Matthew Beesley, the portfolio manager and head of global equities for Henderson Global Investors, said. “You’ve seen that in the bid for Heineken.”

Global brewers have raced to control emerging markets in places like Africa and China, where a rising middle class now has money to spend on premium brands.

They have little choice. Sales in the $651 billion global industry have grown just 1.3 percent annually since 2004.

AB InBev, which makes Stella Artois and Budweiser, has moved the fastest, knocking down close to $100 bln in acquisitions in the past decade.

Buying Heineken could help London-based SABMiller close the gap. It also could block or at least delay one potential way for AB InBev to add to its empire, with a long-speculated potential takeover of SABMiller.

SABMiller’s overture to Heineken was an attempt to short-circuit its own potential acquisition by AB InBev, people with knowledge of the matter said on Wednesday.

Heineken, in a subsequent statement, confirmed that it had spurned the offer and said the Dutch company intended to stay independent.

Clark took over SABMiller in April last year after Graham Mackay underwent treatment for a brain tumour. He told investors at a conference in September last year that mergers and acquisitions would be “less important on our agenda” than organic growth. He also said at the time that he expected more industry deals.

“He clearly wants SAB to continue to be a consolidator and sees himself carrying on the work of Graham Mackay in growing SAB as a global player,” Philip Gorham at Morningstar in London said.

Global brewing mergers and acquisitions have totalled $90 bln since 2008 and slowed to $5.5 bln last year, according to Bloomberg Intelligence. Purchases since 2008 have reached $23.5 bln for AB InBev and $15.6 lbn for SABMiller, according to the data.

Heineken family members had rejected SABMiller’s approach, which had been made in the past two weeks, and were resisting any sale because they wanted to keep control of the EUR34 bln Amsterdam-based brewer, Bloomberg reported on September 24.

SABMiller was assessing its next move, one source added, and it was not clear whether it would approach the family again.


26 September, 2014