Light Beer Gets in Touch With Serious Side http://on.wsj.com/1VM94b7
Mergers, marketing changes brew amid weakened sales; silly ads give way
Light beer used to be funny, with ads featuring talking chimps and men who wear dresses to score discounts at the bar on ladies’ night.
But light-beer sales have fallen off a cliff since 2007 and become such a problem that the decline is a significant factor driving a merger boom in the beer industry, including the prospect of a deal between the world’s two biggest brewers: Anheuser-Busch InBev NV and SABMiller PLC.
In September alone, three big brewers announced craft-beer acquisitions aimed at fueling growth or offsetting some of the big-brand malaise. Those include Heineken NV, which took a 50% stake in Lagunitas Brewing Co. for an estimated value of $400 million. On Sept. 16, AB InBev, the world’s largest brewer, said it approached SABMiller about combining the two companies. A deal would reduce AB InBev’s dependence on the U.S. market at the same time that sales of Bud Light have declined for six straight quarters. It has until Oct. 14 to make an offer.
In the U.S., the world’s most profitable beer market, the top U.S. brands had a dismal summer even though it is their peak season. Volumes of AB InBev’s Bud Light declined 3.3% while those of MillerCoors LLC’s Coors Light fell 0.7% for the three months ended Sept. 5, according to Nielsen data cited by Morgan Stanley. Only Miller Lite bucked the trend, rising 1.8% during the period—a positive for a brand that has reported volume declines for seven straight years.
Until this summer, lower gasoline prices—a boon for discretionary spending—were expected to boost light-beer volumes, which are off 12% since the major brands’ market share peaked in 2007.
Now the brewers are firing their advertising agencies and changing packaging. MillerCoors, the second-largest brewer by volume, ousted two top executives and said it will close a brewery.
The industry’s light-beer problem was on full display at Buckhead Saloon in Atlanta on a recent Thursday night. Dani Fleck, a 24-year-old occupational therapist, and Casey Jones, a 24-year-old financial adviser, sipped on Hi-5 IPAs from Terrapin Beer Co. of Athens, Ga., before switching to Bud Light, which was being given away as part of a promotion.
Mr. Jones said he drinks craft beer with dinner or on nights he plans to have only a beer or two, and Bud Light on weekends at the lake or during college-football tailgate gatherings, when he plans to drink more, because it is easier to drink multiple light beers than a heavier, more alcoholic craft brew. He added, “Craft beers are taking over.”
Drinking behaviors like these have cut the top light-beer brands’ share of the $100 billion beer market to 31.8% from a peak of 35.5% in 2007, according to industry tracker Beer Marketer’s Insights. Craft beer’s market share doubled to 9% over that period, and imported beer rose slightly to 14.1%.
This has created a sense of urgency at AB InBev. In July, Bud Light fired BBDO Worldwide Inc. and hired Wieden+Kennedy, its fifth advertising agency in five years. Anheuser-Busch Marketing Vice President Jorn Socquet said BBDO wasn’t doing “breakthrough work.” A recent ad in the brand’s “Up for Whatever” campaign showed a man in his early 20s playing a life-size game of Pac Man. Mr. Socquet said the campaign was hedonistic and “focused on live for today, not for tomorrow.”
BBDO declined to comment.
MillerCoors ousted its chief marketing officer, Andy England, in July. His successor, David Kroll, later cut ties with Coors Light’s ad agency, Chicago-based Cavalry, and hired 72andSunny. The changes came less than a year after the brewing company’s Miller Lite brand hired TBWA Worldwide Inc., its third ad agency in three years, and returned to its original white packaging and blue logo. The packaging has helped Miller Lite increase volume in recent quarters.
Light beer was created by Miller Brewing Co. in the 1970s, when sales of low-calorie products such as diet soda and margarine were taking off. Miller Lite quickly became the nation’s second-largest beer by volume behind Budweiser, because the brand persuaded men that “diet” beer wasn’t for sissies with ads featuring former professional athletes and other celebrities touting its “Tastes Great, Less Filling” slogan.
Miller Lite now ranks as the No. 4 beer, after Bud Light, Coors Light and Budweiser.
Light-beer ads eventually became silly. Magical trees grew Bud Light bottles and comedian Rodney Dangerfield hit trick golf shots. The humorous commercials drove sales because people associated beer with having fun, said Bob Lachky, Anheuser Busch’s former chief creative officer.
But the silliness gave way to sophomoric humor: women mud wrestlers, talking dogs (saying “sausages, sausages, sausages”) and a fighting squirrel. Cavalry Chief Executive Marty Stock said the quality of humor deteriorated over the years because of executive turnover and changes in ownership at MillerCoors and AB InBev around that time. The sophomoric ads made light beer a punch line in the craft-beer age.
Mr. Socquet wants to change the negative perception craft brewers have stoked that “we’re just a light beer.” Spots next year from Wieden will play up Bud Light’s quality—AB InBev says it takes twice as long to brew as many other beers—and its role in bringing people together. For example, a current ad shows a group of 20-something friends sampling Bud Light from tasting glasses. AB InBev also introduced new packaging featuring the logos of National Football League teams.
MillerCoors plans to focus new marketing on women. Company research shows they account for 25% of light-beer consumption, and Mr. Kroll said they represent a “disproportionate share” of light beer’s decline because they are drinking more cider, wine and liquor. He added that spots are more likely to be “clever and witty” than sophomoric.
“Getting American light lager back to growth is going to be a journey,” Mr. Kroll said.
Glencore Looks to ‘Streaming’ Deals for Quick Cash - http://on.wsj.com/1ZrHJKP
Miner tells fund managers it expects to raise up to $1.5 billion by selling future metals deliveries for advance payments
The next installment in Glencore PLC’s plan to cut its debt is likely to be a fund-raising method called “streaming” that is becoming popular among miners in need of cash, and is a sign of mounting pressure on the industry.
Glencore executives, including Chief Executive Ivan Glasenberg, said in a meeting with fund managers in New York on Wednesday that the company expects to raise between $1 billion and $1.5 billion from streaming deals, according to people familiar with the presentation.
In these deals, miners get an upfront, lump-sum payment from so-called streaming companies in exchange for the future delivery of precious metals like gold and silver. The streaming companies take delivery of the materials—the “metal stream”—which they either sell or store, hoping prices rise.
Glencore needs cash quickly to follow through on a pledge to cut its net debt by $10 billion this year. It has already issued $2.5 billion in new shares, promised another $2.4 billion by cutting dividends, and is trying to sell a stake in its agricultural business. The company is also looking for buyers for some its oil-and-gas assets, according to people familiar with the matter.
Investors concerned about Glencore’s net debt of nearly $30 billion have sent the Swiss miner and trader’s stock price on a wild ride. The stock is down more than 50% this year, and it plunged nearly 30% on Sept. 28 before recovering in recent days. Glencore has said its business “remains operationally and financially robust” and that the company has “absolutely no solvency issues.”
The company joins other miners increasingly seeking out streaming deals, market experts say. A slide in commodity prices, sparked by an economic slowdown in China, has depleted mining-company balance sheets, and high debt loads are raising concerns.
Miners are also having trouble raising cash on the stock market, because investors generally aren’t enthusiastic about investing in the companies as commodity prices hover near multiyear lows. Streaming deals are an alternative source for a quick infusion of funds.
Silver Wheaton Corp., a Vancouver streaming company, launched the industry in the early 2000s. Now, there are about 50 firms offering streaming deals, roughly double the number five years ago, according to Neil Passmore, chief executive of Hannam & Partners, a London firm that advises clients on streaming deals.
“There’s tens of billions of capital available” for miners interested in the deals, Mr. Passmore said.
In 2014, Silver Wheaton pulled in 25.7 million ounces of silver from streaming deals, nearly 60% more than it got from such deals in 2009.
“This is the best I’ve ever seen it in terms of opportunities,” said Randy Smallwood, chief executive of Silver Wheaton, speaking of the market for streaming deals.
Miners enter the deals for a variety of reasons. They might use the cash to expand their operations or purchase other assets. They might also need it to finance ongoing operations and pay off debt.
But the deals also carry risks, experts say. Miners are exchanging future revenue, and the potential upside in prices, for a quick infusion of cash.
They can also be seen as signs of desperation, indicating trouble with mining operations and concerns about a miner’s ability to fund its business in a commodity downturn.
Mr. Smallwood of Silver Wheaton said a number of deals his company has done recently are “repairing” balance sheets of miners. “We’re applying medicine,” he said.
Glencore has become the poster child for such concerns and is racing to raise cash.
The streaming deals could be a quicker way to raise cash than asset sales.
A deal to sell some of the firm’s agriculture assets, for example, isn’t likely to be reached before year-end because of its complicated nature, according to a banker familiar with the talks. Japanese trading house Mitsui & Co. and Singapore’s sovereign-wealth fund have expressed interest in a sale that could fetch between $2 billion and $3 billion, according to people familiar with the discussions.
The streaming deals could be announced within days or weeks, say people familiar with the discussions. The miner has been holding discussions with streaming specialists such as Silver Wheaton and Franco-Nevada Corp., according to people familiar with the talks. Franco-Nevada didn’t respond to a request for comment.
Glencore previously struck a deal to provide silver to Silver Wheaton in 2006. Silver Wheaton agreed to purchase up to 4.75 million ounces of silver a year for 20 years from Glencore’s Yauliyacu mining operation in Peru in exchange for $285 million, plus about $3.90 per ounce of silver as it is delivered. As part of the deal, Silver Wheaton has the right of first refusal on any future silver streaming deals offered by Glencore.
Last week, Teck Resources Ltd., a Vancouver miner, said it struck a deal to deliver silver from its share of the Antamina mine in Peru to Franco-Nevada for $610 million.
Citigroup Inc. analysts said the deal is a “positive development” for Glencore, which owns about one-third of the Antamina mine. Glencore has said it is also holding discussions to sell silver from the mine.
Citigroup said Glencore could get about $915 million from a silver streaming deal at Antamina, based on the deal with Teck Resources, which owns 23% of the mine.
Glencore is also in discussions to sell precious metals in streaming deals from its stake in a Chilean copper mine, Collahuasi, and Antapaccay, a copper mine in Peru.
Renzi revives Italy’s €410bn wealth fund - http://on.ft.com/1ZrGYkX
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The latest outpost of Matteo Renzi’s revolution is a smart conference room in Milan where two of Italy’s best-known bankers sit shoulder to shoulder.
These are the new headquarters of the Cassa Depositi e Prestiti, the country’s €410bn sovereign wealth fund. The 40-year-old Italian prime minister is hoping to blow the dust off the 165-year-old CDP by bringing in Claudio Costamagna, former chairman of Goldman Sachs in Europe, and Fabio Gallia, who was chief executive of BNP Paribas in Italy, and
“The mandate we’ve got is to do things that are in the context of creating and sustaining the growth of the economy,” says Mr Costamagna, 59, describing his arrival in August — and that of 52-year old Mr Gallia — as “an accelerator”.
With its sense of impatience, and determination to turn something old into something new, the move is of a piece with Mr Renzi’s broader project to shake up Italy’s slow-growing economy .
The CDP’s new bosses are hoping they can capitalise on a recent surge in foreigners buying Italian companies. Yet for all the sizzle, their success still remains to be seen.
On paper, at least, the CDP, which dates from 1850 and shares a purpose with France’s Caisse des Dépôts and Germany’s KfW, has the firepower to make an impact. It taps the €250bn Italians have deposited in savings accounts at the post office and also raises its own funds through credit lines and bond issues guaranteed by the state.
Owner of a quarter of oil group Eni, a third of energy companies Terna and Snam and two-thirds of shipbuilder Fincantieri, and venture capital, private equity and real estate businesses it has influence in Italian boardrooms.
Silvio Berlusconi’s government in 2003 began to see the CDP as a vehicle for taking assets off the state’s balance sheet while, in effect, keeping them under state control. Mario Monti’s technocrat government tapped the CDP to take over three government agencies — including export credit company Sace — for €10bn, a small step in Rome’s efforts to reduce its $2.2tn public debt.
Claudio Costamagna and Fabio Gallia during an interview in Milan....Claudio Costamagna, President of Cassa Depositi e Prestiti, left, and Fabio Gallia, Director-General of Cassa Depositi e Prestiti, speak during an interview in Milan, 6 October 2015. Photographer: Alessia Pierdomenico©Alessia Pierdomenico/FT
Claudio Costamagna, left, and Fabio Gallia
Mr Renzi ejected the previous managers of CDP, who had been appointed by his predecessors, with a ruthless pragmatism reminiscent of his ouster of Enrico Letta, the former prime minister, in a party vote. He has made clear he wants the fund to assume a more muscular role.
The aim is “to exploit its full potential to have a stronger impact”, says Mr Gallia, who will present a new business plan in December.
The crux of the change they intend centres on a view Mr Costamagna shares with Mr Renzi that the state should step into the areas where the market has failed to breathe life. It is a crucial issue in Italy, where family-owned, small firm culture is blamed for low productivity and investment.
“The concept of market failure is one of the principles that allows us to invest, and we can do that alone or with other co-investors,” says Mr Costamagna, who was last week courting Asia and Middle East sovereign funds in Milan.
While Mr Costamagna and Mr Gallia decline to provide details of specific projects, bankers say dossiers under consideration include a restructuring of €6bn of debt weighing on state-owned oil group Saipem as well as investments in ultra-fast broadband and a bad bank to clean up a portion of Italy’s €330bn in non-performing loans.
More broadly, they intend to move companies in which CDP has already invested — including an investment made by previous management in UK-based hotel group Rocco Forte — swiftly towards IPO. They will lobby Brussels for more EU funds, they say.
“We need to create more supply of paper: equity, debt, corporate bonds, capital, because more supply creates opportunities. It creates liquidity for large international investors,” says Mr Costamagna. A study from Milan’s Bocconi University suggests Italy could increase GDP by 1 per cent if it doubled the number of companies listed on the stock exchange.
But they admit constraints. Not least there is the risk of infringing the EU’s state aid rules and the need to remunerate the Treasury, which owns 80 per cent of CDP, and banking foundations, which owns 20 per cent. Net income at CDP fell to €1.16bn in 2014 from €2.5bn in 2013 as low interest rates hit interest margins.
As for Mr Renzi’s reform programme, both men concede more is to be done. “But let’s not forget where we are coming from,” Mr Gallia says. “Before we were stuck in the parking lot, now we are on the highway.”
Olivier Bohuon insists Smith & Nephew can prosper on its own - http://on.ft.com/1ZrGv21
Is Smith & Nephew the one that got away? The UK medical device maker has long been seen as a potential target for bigger US rivals. But after 18 months of feverish dealmaking across the healthcare sector, the 159-year-old company is still proudly clinging to its independence.
Olivier Bohuon, S&N’s chief executive, says in a Financial Times interview that the speculation is unwelcome. “It has disrupted our sales force because every day they are with [competitors] who are saying, ‘By the way, we are going to buy you’.”
Analysts say a bid for S&N remains a possibility. As the fourth-biggest maker of hip and knee implants it could be an attractive prize for Stryker or Johnson & Johnson after Zimmer seized leadership of the market last year with its $13.4bn acquisition of Biomet.
However, Mr Bohuon insists he has not wavered from his belief in S&N’s ability to prosper on its own. The 56-year-old Frenchman has been steadily reshaping the company since taking charge in 2011 with a mission to reduce dependence on slow-growing US orthopaedics sales.
There has been heavy investment in emerging markets such as China and Brazil where he says ageing populations and growing middle classes represent “a huge reservoir of opportunity” even if recent economic turbulence has dimmed the short-term outlook.
He has also sharpened focus on faster-growing businesses in the developed world. The $1.7bn acquisition of Texas-based ArthroCare last year made S&N the number two supplier of devices for minimally invasive surgery and joint repair — a business known as sports medicine.
Meanwhile, the company once best known for Elastoplast bandages remains number two in wound care products. “I don’t like it when people call us a hip and knee maker — not because I don’t like hips and knees but because we are more than that,” says Mr Bohuon.
Growth businesses — defined as those with revenue increasing by at least high-single-digit percentages — accounted for over half of S&N’s $4.6bn sales last year, up from a third when he took over. Costs are also being cut with an aim for $120m of annual savings by 2017.
The investment involved in this upheaval has so far limited the rewards to shareholders. Sales rose 4 per cent in the first half of this year and earnings by 3 per cent. But Tom Jones, analyst at Berenberg, says the company is “on the cusp” of faster growth.
For all the talk of diversification, much still depends on S&N’s ability to compete in orthopaedics. To do this Mr Bohuon is experimenting with new business models, such as a “no-frills” service called Syncera which aims to strip away marketing and distribution costs by selling online rather than through sales people. This allows S&N to cut prices without sacrificing margins.
A similar economy model has been introduced in emerging markets such as China where growing middle classes and expanding public health systems are looking for high quality but affordable devices. “Yes we are the number four player but the strategy is one of disruption in products and models,” he says. “I don’t see any sign of weakness because of size.”
In other areas Mr Bohuon says greater scale would help and indicates that acquisitions are likely. He is “hungry” for expansion in wound care and in so-called trauma products, such as plates and screws to fix broken bones.
But will S&N continue to escape its own potential predators? Stryker admitted last year that it had considered a bid and Mr Jones says the rationale for such a deal was “obvious”. Together, the pair would leapfrog J&J in orthopaedics and become market leader in sports medicine.
J&J, meanwhile, has signalled its appetite for deals to absorb some of its $34bn cash pile.
Shares in S&N are down 5 per cent so far this year but up 60 per cent since Mr Bohuon took over, giving the company a market capitalisation of almost £10bn. That is less than half the size of Stryker’s and 6 per cent of J&J’s.
Mr Bohuon questions what further consolidation of the sector would achieve. Zimmer and Biomet will cut costs by merging, he admits, but adds: “Will they grow their top line? I bet it doesn’t work.”
A veteran of the pharmaceuticals industry, he experienced a big merger while working for SmithKline Beecham when it combined with Glaxo Wellcome in 2000. “I’ve lived this, I’ve heard the messages,” he says. “And 15 years later?” He is too diplomatic to state his implicit conclusion that the deal failed to live up to its billing.
There was speculation Mr Bohuon might return to pharma when Sanofi, the French drugmaker, was looking for a new chief executive earlier this year. He does not quash the idea it was a possibility but says: “I was in the middle of a journey here at Smith & Nephew and there is a lot more to do.”
Barrons Summary: positive on MAT, MU
Cover story: Barron's calls Donald Trump a "Teflon presidential candidate," and reports on a 1990s incident in which he unleashed a personal attack on Janney Montgomery Scott gaming-securities analyst Marvin Roffman because of negative statements made about Trump's Taj Mahal casino, an action the editors feel negatively reflects on Trump's character.
Features: 1) Asian experts Paul Chan of Invesco, Ronald Chan of Chartwell Capital, Louis-Vincent Gave of Gavekal Capital, and Erwin Sanft of Macquarie Securities discuss opportunities in Asia following the region's market correction (Positive on CSOP FTSE China A50, Hang Seng H-Share, Industrial & Commercial Bank of China, Bank of China, Ping An Insurance, China Life Insurance, AIA Group, Hui Xian); 2) Positive on MAT: Company, which is releasing a high-tech version of its popular Barbie doll, could see its stock rebound to $30 in a year for a gain of 35% without dividends of 40% with them; 3) Positive on RJF: Market turmoil has hit shares of the midsize brokerage, but it has attractions few competitors can match, and shares could rally from a recent $51 to the low $60s; 4) Positive on MU: Stock has lost nearly half its value during the past year, but company's next-gen 3D NAND flash memory chips for smartphones and tablets should give it a boost, and shares could gain 60% in the next year.
Trader: The market's direction is likely to take its cue from earnings, says Dan Greenhaus of BTIG, and investors "will be listening closely to what executives say about the tenor of their businesses"; Positive on JAZZ: Recent drop in share price could be an opportunity for investors to acquire a fast-growing pharma company at a reasonable price; "Based on long-term trends in strategists' equity allocations, stocks are setting up to rally, according to Merrill Lynch's Sell Side indicator."
Small Caps: Cautious on ESL: Maker of cockpit communication systems and controls has seen lighter orders because of a weak defense environment, lower oil prices, and a strong dollar, but its strategy still looks intact and it has high-quality franchises.
Profile: Val de Vassal, portfolio manager, Glenmede Large Cap Core, screens stocks for positive factors as well as weak spots such as idiosyncratic risk, stock liquidity, insider selling, and volatility (top ten holdings: NVDA, ESV, CAM, AGN, LYB, ARW, SWKS, MYL, STX).
European Trader: Cautious on SABMiller: Should BUD's takeover attempt succeed, shareholders "could soon collect a mouth-watering premium," though if the deal falls through shares are likely to drop below where they traded before the bid was announced.
Asian Trader: "Even if Asian stocks stick within narrow ranges, markets will be calmer, because Beijing doesn't want drama right now."
Emerging Markets: For emerging market companies that don't produce dollar revenues and have weak currencies, rising debt costs could become unmanageable.
Commodities: "The long rout in the coffee market may finally be over. But its recovery probably is temporary, as more clouds gather on the horizon."
Islamic State leaders killed in Iraq airstrike, Baghdadi not among them: hospital
An airstrike on a gathering of Islamic State members in a town in western Iraq on Sunday killed several leaders but the group's top man, Abu Bakr al-Baghdadi, was not among them, hospital sources and residents said.
Iraq's military said earlier that it had targeted a meeting of Islamic State leaders and a convoy carrying Baghdadi to the gathering in two separate airstrikes.
Fed's Fischer says 2015 U.S. rate rise 'an expectation, not a commitment' http://reut.rs/1Po5QFI
U.S. Federal Reserve policymakers are still likely to raise interest rates this year but that is “an expectation, not a commitment”, and could change if the global economy pushes the U.S. economy further off course, Federal Reserve Vice Chairman Stanley Fischer said.
“Both the timing of the first rate increase and any subsequent adjustments to the federal funds rate target will depend critically on future developments in the economy,” Fischer told a group on the sidelines of the International Monetary Fund meeting in Peru.
He said “considerable uncertainties” surrounded the U.S. economic outlook, particularly the drag on exports from slowing global growth, low investment caused by the decline in oil prices and what he called a “disappointing” recent drop in U.S. job growth.
He said he felt the U.S. economy was still generating enough jobs to continue making progress towards the Fed’s goal of maximum employment and that inflation would eventually rise. Based on that, he said, the U.S. central bank should be able to keep on track with an initial rate hike expected in October or December.
But he also cautioned the group that the United States is now more exposed than ever to international events and that developments in China and elsewhere had already influenced the Fed to delay a widely expected rate increase in September.
“We do not currently anticipate that the effects of these recent developments on the U.S. economy will prove to be large enough to have a significant effect on the path for policy,” he said. “That said, recent employment reports have been somewhat disappointing and, as always, we are closely monitoring developments that could affect our sense of the economic outlook and the risks surrounding that outlook.”
Fischer was speaking on the sidelines of an IMF meeting where some other central bankers were encouraging the Fed to eliminate uncertainty and move forward with their rate “lift-off.”
But Fischer said the implications of a global slowdown were to0 serious to ignore and would not let the Fed overcommit on its plans.
Even though uncertainty about the Fed’s intentions might itself roil global markets, “We remain committed to communicating our intentions as clearly as possible – but not more than the facts warrant,” he said.
AB InBev expected to submit improved bid of 4300p to 4400p per share for SABMIller this week
Anheuser-Busch InBev is likely to submit an improved bid of 4300p to 4400p per share for the FTSE-100 brewing company SABMiller this week, The Sunday Times reported. The newspaper cited sources close to AB InBev who added that the Belgian brewing group will submit the revised offer ahead of the deadline of Wednesday, 14 October set by the Takeover Panel.
SABMiller’s board last week rejected a 4215p per share offer from AB InBev, which valued SABMiller at around GBP 65bn (EUR 87.68bn).
It is thought that AB InBev is prepared to improve its offer to nearer to GBP 70bn, but the Belgian brewing company is ready to withdraw should SABMiller refuse to offer some concessions, according to the report.
AB InBev's current offer of 4215p per share is thought to be pounds, rather than pennies, away from a value that SABMiller would consider, the item said.
SABMiller chairman Jan du Plessis has indicated that he will allow an extension to Wednesday's bid deadline and enter talks only if AB InBev makes a substantial improvement to its offer, the item continued. As the bid target, SABMiller has the right to refuse an extension to the deadline, the newspaper's Agenda column noted.
Although some SABMiller shareholders such as Aberdeen Asset Management and Public Investment Corp have indicated that they support the board's rejection of AB InBev's 4215p per share bid, other shareholders have urged the board to enter talks, the article said. The report quoted Ian Liddle, the chairman of SABMiller shareholder Allan Gray, who said 4215p is sufficient to extend the deadline for the offer and keep options open for SABMiller shareholders.
A longer analytical report in The Sunday Times said SABMiller’s largest shareholder, the Virginia-based tobacco company Altria, had been discussing with AB InBev ways to structure a takeover of SABMiller for six months. Altria last week said it supported the 4215p offer from AB InBev.
The Belgian brewing group has also held talks with SABMiller’s second-largest shareholder, the Santo Domingo family, the item continued. Although those talks were less conclusive than AB InBev’s discussions with Altria, they left the Belgian group with the impression that progress could be made, according to the report.
The Santo Domingo family’s two board nominees at SABMiller voted to reject AB InBev’s 4215p per share offer last week, the item continued. The report cited senior sources familiar with the board’s decision who speculated that the Santo Domingos are not keen on AB InBev’s strategy of cust-cutting. However, others said the family is merely awaiting an improved offer, the article added.
AB InBev says the partial share alternative it had proposed was drawn up “with and for” the Santo Domingo family’s BevCo investment vehicle prior to any bid approach.
It is known that AB InBev is in touch with BevCo via the private equity group 3G Capital, the item continued. BevCo is an investor in 3G, which holds a 21% stake in AB InBev, the article noted.
SABMiller’s share price closed 27.5p up at 3668.5p in London on Friday, 9 October, giving the company a market capitalisation of GBP 59.39bn.