Paris | Wednesday
THE Belgian brewing giant Interbrew declined comment on Wednesday on a report it has prepared a 6,4-billion-euro bid for rival South African Breweries (SAB) to create a global giant drink group, but promised a statement later as SAB shares surged.
Interbrew was ready to offer more than four billion pounds (6,4-billion euros, $5,7-billion), the Financial Times reported.
The newspaper reported that it had seen documents prepared by advisors which “indicate that an approach could be announced on December 3, with the offer closing on January 7”.
The newspaper quoted the documents as saying: “Provided that the strategic logic was clearly spelt out, we believe that the market reaction to such a deal on a merger basis would be positive.”
SAB is listed on the London stock exchange with capitalisation of 3,4-billion pounds, which suggested that “a bidder would have to offer more than four billion pounds”, the report said.
SAB shares jumped by 8,58% in early trading on Wednesday, to 480,75 pence, topping the list of rising issues.
In the documents, South African Breweries (SAB) is referred to by the code name “Zulu”, while Interbrew was given the name “Ice”, the FT said.
Interbrew chairman Hugo Powell acknowledged that an analysis of SAB had been made, but said other groups had also been considered.
Powell denied that Interbrew was at an advanced stage in a bid for SAB, nor even that his company was in talks with the South African brewer.
SAB official Nick Chaloner told South African public radio SABC that he “can’t comment” on the FT report, and in Brussels group representative Corneel Maes said he had no comment but would make a statement as soon as possible.
Interbrew, in common with other leading brewers, notably in Europe, has been active in identifying takeover targets in a highly fragmented world brewing market in recent years, but ran into competition difficulties in acquiring Bass breweries in Britain.
A bid for SAB by Interbrew, which makes Stella Artois beer, would block a global tie-up dubbed “Scar” between SAB, the British group Scottish and Newcastle, and Miller Brewing, part of the US conglomerate Philip Morris, the report said.
Interbrew would also benefit from SAB’s experience in emerging markets, particularly in China, which has huge potential.
The Belgian group is the second-biggest brewer in the world in terms of volume of sales, alongside Heineken depending on the method of calculation, and markets its brands in over 110 countries. It posted a turnover of 5,6-billion euros in 2000.
The fragmented global market is dominated by Anheuser-Busch of the United States.
The documents had been prepared for presentation to the Interbrew board, and noted that further study of potential cost savings and regulatory issues was needed, the FT said.
Interbrew acquired German brewer Beck’s in early August, after buying the British group Bass a year earlier.
Britain’s Competition Commission blocked the Bass deal in January on the grounds it would reduce competition and damage consumers’ interests because it would leave Interbrew with around one third of the British beer market.
But a High Court overruled the government’s objection to the takeover on May 25, saying it was unfair to block the transaction on grounds of “public interests”.
Interbrew’s purchase of Beck’s was approved by the European Commission on October 26.
“While the activities of these two companies overlap on the European beer market, and particularly in the premium lager segment, the acquisition raises no competition problems,” the commission had said in a statement. – AFP