ELLIS MNYANDU, Johannesburg | Saturday
SHARES in South African Breweries (SAB), the world’s fifth-largest beermaker, rose sharply on Friday amid expectations of either a merger or a takeover involving a major European peer.
”There are expectations that we may soon see some kind of a merger or some partnership deal coming through. That is putting a lot of upside on the share price,” said one beverage industry analyst.
Traders and analysts said SAB was also benefiting from its interim earnings on Thursday which showed a strong performance from is brewing interests in Eastern Europe and China.
Other traders said the market was awash with talk of a possible takeover bid for the group, with the world’s No 2 brewer Interbrew cited as the likely suitor or partner for SAB.
A SAB official in London declined to comment, but suggested the share price rise was a reflection of its half-year results which showed strong growth outside South Africa and hence less reliance on rand-based earnings.
Banking sources close to Interbrew, which made its market debut on Friday, said it was not contemplating any immediate deal with SAB nor with anyone else. ”Its hands are full with the IPO, and it wants to see how the prices of current brewing deals consolidate,” one source said.
They added that SAB had had a close look as Bass’s brewing division and had been in talk with private equity firm Hicks, Muse, Tate and Furst about a possible alliance for Bass brewing, but said SAB declined to pay as much as the 2.3bn pounds it was finally sold for to Interbrew.
SAB is currently looking at smaller deals in Germany and Eastern and Central Europe, they added. SAB is already Central Europe’s largest brewer after it bought the Pilsner Urquell business in the Czech Republic last year.
Traders said the market was also snapping up SAB as a result of a focus on the group’s better-than-expected profits and in its global growth rather than its misfortunes in South Africa, where first-half beer volumes fell by six percent.
The London-listed brewer, maker of Castle and Lion beer, reported that pre-tax profits for the half year to September had sagged to $310m from $319m, but still beat analyst forecasts of $275-295m. – Reuters