(Les Echos) La Bourse de Paris fait évoluer son « fixing »

Pour éviter les fraudes, les fixations des prix d'ouverture et de clôture des actions s'effectueront à un moment choisi au hasard dans une période de 30 secondes.
C'est une petite révolution dans les procédures d'Euronext. L'opérateur boursier paneuropéen a en effet décidé, à l'instar de ses grands homologues, de déterminer de façon aléatoire le moment où sont établis les cours d'ouverture et de clôture des actions, cotées en continu sur ses marchés.
A l'heure actuelle, en effet, le processus est toujours le même. Les ordres des investisseurs peuvent être passés « avant Bourse », puis éventuellement modifiés ou annulés de 7 h 15 à 9 h 00. Pendant cette période, la comparaison de livres d'ordres permet de donner un prix indicatif des actions sur les marchés Euronext. Mais c'est au moment exact de l'ouverture, lorsque tous les ordres sont définitifs, qu'est fixé le prix d'ouverture. Celui-ci servira de référence toute la journée pour les marchés. Pour déterminer le prix de clôture, la même procédure s'applique. Les ordres sont recueillis de 17 h 30, heure de fin des échanges quotidiens, à 17 h 35. A cet instant précis, les cours de clôture sont arrêtés. Ces prix sont d'une importance capitale, car ils sont notamment utilisés pour le calcul de la progression des indices ou de l'évolution de la valeur du portefeuille des investisseurs.
Le problème, c'est que ces procédures sont bien trop prévisibles. « L'heure du "fixing" [la détermination des cours, NDLR], étant parfaitement connue, il existe un risque théorique que certains acteurs de marchés cherchent à manipuler le cours d'ouverture et de clôture », explique Simon Gallagher, responsable marchés au comptant actions d'Euronext.
Agissements frauduleux
Concrètement, un acteur mal- intentionné pourrait passer des ordres sur un volume important de titres pendant la période de fixation du cours. S'il souhaite jouer un titre à la hausse, par exemple, il va passer un gros ordre à l'achat avant l'ouverture. Il va ainsi faire monter le cours indicatif de l'action sur lequel les autres acteurs vont se positionner. Puis au tout dernier moment avant la fixation du cours, il annule son ordre. Le prix d'ouverture restera tout de même élevé. « Ce type d'agissements fait déjà l'objet d'une surveillance de la part de notre équipe de contrôle et de l'Autorité des marchés financiers, poursuit Simon Gallagher. Néanmoins, nous avons décidé d'adopter en la matière les bonnes pratiques en vigueur chez les grands opérateurs boursiers européens. »
A l'instar de Londres et Francfort

Bientôt, en effet, la détermination des cours d'ouverture et de clôture n'aura plus lieu à heure fixe, mais à un instant choisi au hasard dans une période de 30 secondes, entre 9 h 00 et 9 h 00 trente secondes, et entre 17 h 35 et 17 h 35 et trente secondes. Cette durée est la même que celle qui a été retenue par le London Stock Exchange ou la Bourse de Francfort. « Si l'acteur de marché mal-intentionné ne connaît plus avec précision le moment où le fixing a lieu, il ne pourra pas annuler son ordre à temps, et devra donc l'exécuter, explique Simon Gallagher. Ce risque devrait donc être dissuasif. » Les ultimes tests ayant été effectués, la nouvelle procédure entrera en vigueur le 28 septembre.

(Less Echos) Altice : un empire bâti sur une montagne de dettes et géré au corde

Altice : un empire bâti sur une montagne de dettes et géré au cordeau

Décodage des montages financiers d’une galaxie Drahi forte de 52 milliards d’euros d’acquisitions. Et de leurs risques.
Y-a-t-il une méthode Drahi, derrière des montages à première vue extrêmement sophistiqués ? Il y a des ingrédients de base communs qui relèvent de l’univers des LBO, dans les 52 milliards d’euros d’acquisitions qu’il a réalisées en environ un an et demi . En résumé, il s’agit de faire des emplettes de taille, en faisant porter la dette sur les actifs acquis. « Mais, à la différence d’autres groupes, il n’y a pas de cascades de holdings », relève Jean-Michel Salvador, analyste chez AlphaValue.
Restructuration de dettes
Parallèlement, Altice restructure en permanence sa dette. Pour le rachat de SFR , par exemple, Patrick Drahi a contracté une dette long terme dont le premier anniversaire de remboursement est fixé à mai 2019. Seul le paiement des intérêts est dû d’ici là. Et la dette est à taux fixe : cela coûte plus cher, mais c’est le prix de la tranquillité. Mieux : pour financer le rachat des 20 % de Vivendi dans SFR qui lui manquaient, l’hommes d’affaires a refinancé il y a un mois deux tranches qui étaient à sept ans en les décalant à dix, réussissant, au passage, à faire baisser le taux d’intérêt à 3,3 %.
Des ratios de dette élevés
La grande force d’Altice est de parvenir à faire des acquisitions dans des secteurs à forte visibilité, et de savoir ensuite restructurer. Selon les calculs d’Alphavalue, la dette consolidée de l’ensemble Altice devrait être autour de 45 milliards d’euros en fin d’année, pour un Ebitda d’environ 9 milliards, soit un ratio de 5 environ. Un chiffre au-dessus de la moyenne du secteur des télécoms en Europe (autour de 2,5 ou 3).« On a rarement vu de tels ratios dans cet univers. Patrick Drahi fait le pari que la croissance de l’Ebitda de l’entité acquise - excédent brut d’exploitation - sera suffisante pour ne pas faire exploser ses ratios de dette. En clair, qu’il va arriver à mieux gérer Cablevision que ses prédécesseurs », explique Jean-Michel Salvador. Certes, les ratios dette nette/Ebitda sont élevés mais, autrefois, l’homme d’affaires faisait bien pire. Quand il a racheté Noos, il a « leveragé » 10 fois l’Ebitda !
Jusqu’où ira-t-il ?
Jusqu’à quel point Altice peut-il tenir ? « Si on stoppait notre développement, en cinq ans, on n’aurait plus de dettes. Mais cela serait stupide car cela voudrait dire qu’Altice n’aura pas grandi pendant cinq ans », indique-t-on chez Altice. Les Cassandre, eux, ont encore en mémoire la galaxie Messier, au début des années 2000, qui avait explosé en plein vol, à force d’acquisitions. « Drahi a une vraie capacité de conviction, est très habile et sait générer des synergies. Il a la confiance des investisseurs, des banquiers, et du marché, ce qui créé un cercle vertueux. Tant qu’il l’aura, il pourra continuer dans cette voie », résume Vincent Maulay, chez Oddo.
Le « deal » SFR a montré sa capacité à enivrer les marchés financiers : il a réussi à réunir 100 milliards de dollars de demandes, alors qu’il avait besoin de dix fois moins ! Du jamais vu dans la tech. Aujourd’hui, les banques se précipitent à sa porte, au point qu’elles ne lui imposeraient plus de clauses lui interdisant d’aller au-delà d’un certain multiple d’endettement...
Mais des risques guettent

Plusieurs éléments pourraient toutefois venir gripper la machine : notamment une brusque remontée des taux d’intérêt , même si Altice a cherché à limiter sa sensibilité aux taux. Autre risque : une récession mondiale marquée, plombant les bénéfices des sociétés. Patrick Drahi a sûrement encore en mémoire la faillite de Lehman Brothers en 2008 qui a fait violemment tanguer Numericable, réputé alors proche de la faillite. Mais, là encore, son exposition de plus en forte dans une économie solide, les Etats-Unis, pourrait le préserver.
50 milliards d’euros de plus
De l’avis de spécialistes, Altice peut donc encore grossir. D’après les calculs d’Oddo, il aurait la capacité de faire encore pas moins de 50 milliards d’euros d’augmentation de capital, sans que Patrick Drahi ne perde le contrôle, g râce à la modification de la structure de son capital réalisée en août.

>>> Asian Update

Asian Mid-session Update: FOMC unnerves investors with a dovish hold


***Economic Data***
- (NZ) NEW ZEALAND SEPT ANZ CONSUMER CONFIDENCE INDEX: 110.8 V 109.8 PRIOR; M/M: +0.9% v -3.6% PRIOR
- (NZ) NEW ZEALAND AUG ANZ JOB ADVERTISEMENTS M/M: -1.7% V 0.0% PRIOR
- (KR) South Korea Aug PPI M/M: -0.5% v -0.4% prior; Y/Y: -4.4% (13th straight decline) v -4.0% prior
- (US) NORTH AMERICA AUG SEMI BOOK/BILL RATIO: 1.06 V 1.02 PRIOR; 2nd month above parity

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -1.3%, S&P/ASX +0.4%, Kospi +0.9%, Shanghai Composite -0.2%, Hang Seng +0.5%, Dec S&P500 +0.1% at 1,980

***Commodities/Fixed Income***
- Dec gold +0.9% at $1,127/oz, Oct crude oil -0.2% at $46.80/brl, Dec copper -0.5% at $2.44/lb
- (CN) China MOF sells 1-yr bills, avg yield 2.31%
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3607 v 6.3670 prior setting; strongest Yuan setting since Sept 7th
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, and ¥20B in inflation-linked JGBs
- (AU) Australia MoF (AOFM) sells A$800M in 2.75% 2019Bonds; avg yield: 2.0313%; bid-to-cover: 3.92x

***Market Focal Points/FX***
- Going into Thursday's decision, analysts were largely divided on whether the Fed would outright raise rates for the first time in 9 years or hold with a more clearly expressed intentions for tightening. Few were expecting a hold with a more dovish bias, but that is precisely what the statement and the accompanying projections contained. Despite acknowledging continued improvement in labor, the Fed emphasized global uncertainty, slowdown in China, the strength of USD, and inflation "nowhere near" target. Economic Forecast saw cuts in GDP and PCE inflation outlook, and the "dot chart" saw median rate for 2016 and 2017 reduced by 25bps, and the long run by 30bps to 3.50%. Also telling, 2015 outlook now saw 13 out of 18 officials anticipate a liftoff - down from 15 prior - even though Chair Yellen maintained every remaining meeting in 2015 would be live for an increase.

- Market reaction was mixed, as Treasuries rallied particularly on the short end and the yield curve steepened. US stocks initially spiked up but then ended at levels below pre-FOMC. USD was down sharply across the board, falling over 100pips below 119.90 in USD/JPY and through 1.1440 in EUR/USD. Commodity FX also initially spiked up but retreated in the waning hours of the US session. Asian markets are now tracking that caution as investors ponder whether the dovish tilt to the Fed outlook implies more speedbumps ahead.

- China put out its housing prices that continued to recover. Across top 70 cities prices m/m were +0.6% (3rd straight increase) v +0.2% prior, while y/y the decline slowed to -2.3% v -3.7% prior (12th straight decline). HKMA chief Chan still expressed concern over local economy and property market, just as China Pres Xi reiterated the economy is resilient, with capacity to maintain medium to high growth rate in long term.

- RBA Gov Stevens also straddled both sides of the fence, noting some improvement in non-mining sector, but overall economic growth below levels previously projected. AUD/USD was little changed on Stevens comments, even as he added that further decline in AUD would create a serious inflation problem as the currency has already made a big adjustment. On Australia's political front, approval rating for the ruling Coalition has topped that of opposition for the first time in 16 months in the wake of leadership transition this week.

- In Japan, the BOJ released the minutes of its Aug meeting that saw members agree Japan economy will continue modest recovery and noted inflation expectations on the rise. Sentiment produced little market reaction, as it follows a more recent policy statement this week where the BOJ cut its assessment of exports and output. Also of note, high-profile former MoF official Sakakibara said continued Yen weakness is unlikely, and that there's greater chance of a move to ¥115-120 range then to ¥125 level.

***Equities***
US equities / ADRs:
- AKS: Guides Q3 -$0.07 to -$0.02 v -$0.26e; cites higher shipments and lower costs; +13.2% afterhours
- TXN: Increases dividend 12% to $0.38 from $0.34 and authorizes $7.5 billion in share repurchases (15% of market cap); +1.0% afterhours
- ADBE: Reports Q3 $0.54 v $0.49e, R$1.22B v $1.21Be; Guides Q4 $0.56-0.62 v $0.65e, R$1.275-1.325B v $1.37Be; -2.1% afterhours
- LQ: Cuts FY15 pro forma adj EBITDA $393-400M, RevPAR growth +3.5-4.5% (prior $398-404M, RevPar +4.5-5.5%); accelerates $100M of $200M share repurchase program (4% of market cap); -5.4 % afterhours

Notable movers by sector:
- Consumer discretionary: Sydney Airport SYD.AU +1.7% (Aug result); Asics Corp 7936.JP -5.3%(lowers guidance)
- Financials: Premier Investments PMV.AU -1.4% (FY15 result); Seven & I Holdings 3382.JP +2.8% (speculation on Q2 and store close); Cheung Kong Property Holdings 1113.HK +2.0% (guidance); China Merchants Land 978.HK +7.5% (China Merchant Property's integration); Biostime International 1112.HK +28.0% (acquisition)
- Industrials: Boral BLD.AU +1.5% (enters into settlement); Mitsubishi Motors 7211.JP -1.3% (vehicle recalls)
- Technology: Veda Group VED.AU +0.1% (Equifax shows interest to acquire)
- Materials: Arrium ARI.AU -1.1% (update on bid for unit)
-Energy: Woodside Petroleum WPL.AU -0.7% (speculation to consider raising debt)
- Utilities: SDIC Power Holdings Co 600886.CN -10.0% (private placement)

>>> US After Hours Summary: PDEX +25.9%, AKS +12.8%, LQ -5.1%, A

After Hours Summary: PDEX +25.9%, AKS +12.8%, LQ -5.1%, ADBE -2.4% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: PDEX +25.9%, AKS +12.8%

Companies trading higher in after hours in reaction to news: VBLT +15.7% (announced that complete Phase 2 data on VB-111, in combination with Bevacizumab will be presented at the European Society for Medical Oncology's (ESMO) European Cancer Congress), RXDX +1.5% (announced initiation of Phase 1/1b clinical trial of RXDX-107 in patients with locally advanced or metastatic solid tumors), TXN +1.0% (increased its quarterly cash dividend by 12%, to $0.38/share from $0.34/share; authorized the repurchase of $7.5 billion in common shares), ARW +0.7% (announced authorization for an additional $400 million in repurchases, via its common share repurchase program)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: LQ -5.1%, ADBE -2.4%

Companies trading lower in after hours in reaction to news: AI -1.9% (reduced its quarterly dividend to $0.625/share from $0.875/share), KGC -1.2% (lowered guidance for all-in sustaining cost per gold equivalent ounce sold to $975-1025 from $1000-1100; lowers CapEx guidance to $650 mln from $725 mln), MTGE -0.5% (lowered quarterly dividend to $0.40/share from $0.50/share, says it repurchased 1.2 mln shares in Q3)

>>> SABMiller/AB InBev requires clear US exit, attorneys say

SABMiller/AB InBev requires clear US exit, attorneys say

Following Anheuser-Busch InBev’s (NYSE:BUD) 2013 acquisition of Grupo Modelo, the Department of Justice (DoJ) will not allow the global beer giant to pick up additional US market share, antitrust attorneys said.

Belgium-based AB InBev confirmed on 16 September its intention to pursue SABMiller (LON:SAB). No further details regarding the terms of the proposed combination of two of the world’s largest beer makers have been released. SABMiller would be open to engaging in talks, media reports have said. A spokesperson for AB InBev declined to comment.

SABMiller owns a majority stake in the MillerCoors joint venture, which brews beers under Miller and Coors brands in the US. A deal with InBev would give the combined company a market share of more than 70% in the US.

Based on such a high level of market concentration, InBev will have to divest the joint venture to secure US antitrust clearance, according to two antitrust attorneys with knowledge of the industry and Mike Mazzoni, senior partner at consultancy Seema Interational.

The DoJ already views the US beer market as susceptible to coordinated effects, the two antitrust attorneys said. That’s in part because competitors such as AB InBev and SABMiller’s MillerCoors typically follow each other in terms of price, with the former as the price leader, the two antitrust attorneys and Mazzoni said.

AB InBev “can’t get any bigger in the US. Period. End of story,” the first antitrust attorney said.

In 2013, the DoJ found that Mexican brewer Modelo’s Corona brand acted as a so-called maverick in the US, providing a destabilizing force for beer prices. To complete the deal, InBev agreed to sell the US rights and capacity to produce Modelo beer to Constellation Brands (NYSE:STZ).

“This deal only happens because SABMiller will transfer their interest in MillerCoors and exit the joint venture,” the first antitrust attorney said.

Under the JV agreement, Molson Coors Brewing (NYSE:TAP) has a right of first refusal to buy SABMiller’s interest in MillerCoors.

SABMiller currently receives 58% of MillerCoors’ profits, while Molson Coors (MCBC) gets 42%, according to MCBC’s most recent 10-K filing with the US Securities and Exchange Commission (SEC).

MillerCoors was formed in July 2008. As the second-largest brewer by volume in the US, MillerCoors accounted for approximately 27% of the total US brewing industry in 2014, according to an SEC Filing. That figure excludes exports.

MCBC’s entire US segment consists of and results from the joint venture with SABMiller, according to its 10-K. In the US, MillerCoors core brands include Coors Light and Miller Lite, as well as Blue Moon, Coors Banquet, Keystone Light and Miller High Life, among others, according to the 10-K.

There are also some imports under the MillerCoors joint venture, including Grolsch. Grolsch is owned between MCBC and Royal Grolsch, a member of the SABMiller group, according to the 10-K. The merging parties could transfer control of imports to MCBC, too, the first antitrust attorney said.

Divesting SABMiller’s interest in MillerCoors to MCBC would preserve the competitive status quo in the US, the second antitrust attorney said. The DoJ typically defines this market as “all-beer,” while some subcategories can exist such as sub-premium, premium, super premium and high-end, the first and second antitrust attorney said.

Yet the DoJ has also acknowledged that the lines between those subcategories and the various brands are not explicitly clear, the second antitrust attorney said. In the tie-up of AB InBev and Modelo, the DoJ found a lot of switching and competitive interaction between Corona and certain Budweiser products, even though the former was considered more high-end, that attorney explained.

“Then they alleged the all-beer market, as opposed to a separate market for premium beers,” the second antitrust attorney said.

In any case, regulators will examine the extent to which the prices of AB InBev brands and SABMiller brands constrain each other in various US markets, the third antitrust attorney said. “The interesting thing is that drinking habits are all different,” that attorney said. “The short-cut is, what are two or three of your favorite beers? Then, how many of these guys have an interest in them?”

>>> Altice plans Cablevision network rebuild to support equity raise

Merger Market

Altice plans Cablevision network rebuild to support equity raise - chairman

* Growing dissension among Dolan family members led to deal
* Will continue to look at acquisitions if they present themselves

Altice (AMS: ATC) will look to lay fiber to the curb, or the last amplifier, in a network rebuild that it estimates will take five years, said Altice Chairman Patrick Drahi.

This new build-out will allow the company to grow EBITDA, a prospect it hopes will underpin investment in the company’s planned equity raise, he told this news service on the sidelines of Goldman Sachs Communacopia conference this afternoon.

The European cable and wireless company said Thursday it had entered into a definitive agreement to acquire US-based Cablevision Systems Corporation (NYSE: CVC) for USD 34.90 in cash per share, in a deal valued at USD 17.7bn.

As part of the deal, the Amsterdam-listed telco investment vehicle will raise approximately USD 2bn in equity financing, with potential private equity investors BC Partners and CPP Investment Board participating in the funding. The PE firms have the option to participate for up to 30% of Cablevision’s equity.

The Mergermarket Group, publisher of this news service, is a BC Partners portfolio company.

Drahi told investors at the Goldman Sachs event that Altice is aiming to increase Cablevision’s EBITDA margins from 32% currently to 40% over time. He also told the US audience of his margin successes in France, Portugal and Israel.

An industry banker said "growing dissension" among the controlling Dolan family pushed Cablevision toward a sale. The banker added that the company has tried in the recent past to elicit interest from Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC), as either player would be able to consolidate the metropolitan New York cable market, the nation's largest.

A Cablevision spokesperson did not immediately respond to a request for comment.

A person with knowledge of Time Warner Cable's thinking on the matter told this news service in May that it might have given strong consideration to an acquisition of Cablevision five years ago, but since then Cablevision's footprint has become heavily penetrated by telecom giant Verizon Communications' (NYSE: VZ) FiOS video service.

The industry banker said Cablevision CEO James Dolan is now more interested in The Madison Square Garden Company (NYSE: MSG) and its related assets than trying to expand Cablevision's cable franchise. MSG's board granted final approval for a spinoff of its entertainment and sports businesses into a separately traded entity last week.

Meanwhile, Altice CEO Dexter Goei told this news service, also on the sidelines of the Goldman Sachs conference, that the company would not need to wait to digest Cablevision to make another deal if the opportunity presents itself.

Asked if Altice would be able to pursue other transactions before the expected close of the Cablevision deal in the first half of 2016, Goei said the company would stay proactive. In the current market, lining up concurrent deals is key, Goei, added.

The Cablevision transaction comes on the heels of Altice's May 2015 deal to acquire Suddenlink Communications, the seventh-largest cable group in the US, for USD 9.1bn.

Taken together with the Suddenlink assets, Altice's deal for Cablevision will make it the fourth-largest cable operator in the US, the company said Thursday.

Goei reiterated comments made earlier in the day by CFO Dennis Okhuijsen that Altice expects to complete a USD 2bn capital raise before the Cablevision deal has been consummated.

FT : Glencore criticised for breaking pledge on share placing

Glencore criticised for breaking pledge on share placing

Glencore’s actions in its $2.5bn equity placing this week fell “well short” of the standards expected by institutional investors, two leading trade bodies said on Thursday.
In a joint statement, the Investment Association and the National Association of Pensions Funds, whose members manage nearly £6tn of assets for their clients, accused Glencore of breaking a pledge to give existing shareholders the right of first refusal in any stock offering.

Glencore, which is reeling from the latest commodities slump, on Tuesday launched its $2.5bn share placing — rather than a rights issue — to help reduce its large debt load, and thereby preserve its investment grade credit rating.
Ivan Glasenberg, Glencore chief executive, and other senior managers paid $550m in the share placing to maintain their combined stake of 22 per cent in the group.
At its annual meeting in May, Glencore had promised to uphold best practice principles on pre-emption rights. In return, investors backed a resolution allowing the Swiss miner-cum-trader to issue new equity amounting to up to 9.9 per cent of its existing stock without the need for a shareholder vote.
Glencore decided not to uphold the pledge on pre-emption rights made at the annual meeting in the share placing, citing the need to complete the fundraising in a timely fashion.
“Glencore’s actions fell well short of the standards expected by institutional investors, agreed under the principles [on pre-emption rights] and embraced by the company as recently as May of this year,” said the Investment Association and the National Association of Pension Funds.
They also said: “Whilst shareholders generally recognise that the company needed to strengthen its balance sheet, the use of the authority [given by investors at the annual meeting] in this manner is a serious and unnecessary breach of the principles [on pre-emption rights].
“Most importantly, there is no evidence of any suitable consultation with existing shareholders. This sets a very damaging precedent for market practices.”
Bankers said Glencore wanted to move quickly with the share placing in order to address market concerns about the strength of its balance sheet.
Glencore has been the worst performer in the FTSE 100 index this year, falling as much as 60 per cent to a record low of 118.1p on Tuesday, shortly before the share placement was confirmed.
Since then the shares have rallied by as much as 15 per cent to 132.4p, but they have fallen almost 80 per cent since its 2011 listing — the biggest flotation in the history of the London Stock Exchange.
Glencore declined to comment on the statement by the two trade bodies.
People close to the company said it had consulted with shareholders for a week before the placing was launched and that it had prioritised existing shareholders and long-only equity funds when it came to allocating stock.
“There was a very open discussion with shareholders about the right structure for the offer,” said one of the people. “There was never a thought of cocking-a-snook at investors.”
However, Daniel Godfrey, chief executive of the Investment Association, said he had received a number of complaints from shareholders and questioned whether they had all received their full entitlement in the placing.
Citi and Morgan Stanley were joint bookrunners on the share placing. Barclays acted as co-bookrunner.
Key shareholders including Qatar Holding, the investment arm of the country’s sovereign wealth fund, and Harris Associates, the US investment firm, participated in the share placing.

FT : AB InBev looks to win over SABMiller investors

AB InBev looks to win over SABMiller investors

At a beer conference in Arizona last year, a reporter asked Alan Clark whether it was feasible for the highly acquisitive Anheuser-Busch InBev, the world’s biggest brewer, to try to bid for SABMiller, the second largest.
“You could get the numbers to work,” said Mr Clark, then nine months into the job as SABMiller’s chief executive, with unusual candour for a corporate head. “There would be value loss and value destruction because they’d know that they’d have to sell the US though.”

Making the numbers work is exactly what will determine whether SABMiller shareholders agree to a takeover following the approach this week by Budweiser-brewer, AB InBev. The terms of a deal that would create a $275bn company, had not yet been disclosed on Thursday.
As it happens, AB InBev will not have to make too many shareholder visits because 42 per cent of the London-based company is in the hands of just two shareholders.
For AB InBev, convincing Altria, the US tobacco company that holds 27 per cent, and Colombia’s billionaire Santo Domingo family, which has 15 per cent, of the merits of the deal would be more than half the battle won.
AB InBev should not neglect the views of its own shareholders. “At today’s share price, this deal does not work for me as it won’t be that accretive. There will only be small gains to returns, which does not make a deal that worthwhile,” one of its top 50 investors said.
SABMiller has become a target for several reasons.
First is the M&A impulsion of the trio of Brazilian big shareholders in AB InBev — Jorge Paulo Lemann, Marcel Herrmann Telles and Carlos Alberto Sicupira — who favour takeovers as a driver of growth.
The three all have a background in private equity and are also the co-founders of 3G Capital Partners, the investment firm that has been buying up US food assets, such as Heinz and Kraft.
Second, AB InBev is already a big company with $45bn in annual revenues, so it needs a substantial acquisition to scale up further.

Such opportunities are rare. Of the next three largest brewers — SABMiller, Heineken and Carlsberg — SABMiller is the only one potentially available for sale.
Heineken is family-controlled and rebuffed a merger approach from SABMiller last year, while Carlsberg is protected by a foundation. The Danish brewer’s significant exposure to the volatile Russian beer market, which has hit profits, does not make it attractive to AB InBev.
Strategically, analysts believe SABMiller is a good fit for the Belgian-Brazilian brewer as more than 70 per cent of its sales are to emerging markets. This profile complements AB InBev’s similar skew towards the Americas.
Other than in the US and China, there is little territorial overlap of significance, which may partly explain why SABMiller has long been rumoured to be the object of AB InBev’s takeover intentions.
Timing has also played its part. Before confirmation of the approach, SABMiller’s shares were trading 21 per cent lower than last year’s high of 3768p which had been driven up in part because of AB InBev takeover rumours.
The stock has since drifted down in line with emerging markets downgrades, making the company more affordable to AB InBev and attractive, depending on its investment outlook.

“It may also be that the controlling shareholders of ABI believe that the emerging market sell-off is overdone, particularly when it comes to currency, and that SAB’s dollar earnings and hence share price, are artificially depressed,” said Trevor Stirling, analyst at Bernstein. “In short, now is a good time to buy high quality emerging market assets.”
AB InBev will try to extract significant synergies — Robert Ottenstein, analyst at Evercore estimates as much as $2bn — through a tie-up with SABMiller and the scale of the new brewing group would potentially give it greater purchasing power in the beer market.
“We don’t see how SABMiller can credibly fend off ABI’s approach in a way that adds much value to shareholders,” said Andrea Pistacchi, analyst at Citigroup.