Abstract:
Bloomberg reports on SAB's offer to Heineken
Bloomberg reports that SAB made an approach to the controlling family of
Heineken to make an offer for the company two weeks ago, but the offer was
rejected by the Heineken family commenting that "The Heineken family has
informed SABMiller, Heineken and Heineken Holding N.V. of its intention to
preserve the heritage and identity of Heineken as an independent company. The
Heineken family and Heineken N.V.'s management are confident that the Company
will continue to deliver growth and shareholder value." This move by SAB would
effectively have been a poison pill against a possible bid by ABI. L'Arche
Green (Heineken family) holds a 51.482% stake in Heineken Holding which in turn
owns 50.005% of Heineken NV.
UBS views
We discussed this possible scenario in our 16 April report "" (p37),
attributing a low probability exactly for the reason that we thought the
Heineken family wishes to retain control of the business and would rather pick
up possible assets that could require disposal in an ABI/SAB combination.
Strategic rationale behind the offer
The strategic rationale of SAB combining with Heineken would be about adding
the Heineken premium brand to SAB's geographic footprint, especially in EM,
given that SAB lacks an international premium brand of scale (Grolsch, Peroni,
Pilsner Urquell are all small). However, a combination of SAB/Heineken would
likely raise anti-trust concerns in South Africa, Nigeria, Poland, Czech,
Romania, Holland, Italy and India. The fact that SAB approached Heineken to
create a possible poison pill against an approach by ABI, illustrates how
seriously the SAB Board and management views this possible scenario.
Valuation
We have a Buy rating on ABI with a DCF-based €94 PT while we are Neutral on
SABMiller (DCF-based PT 3,500p) and Heineken (DCF-based PT €56).
For a full version of this report, including disclosure information and analyst
certification, please see the attached PDF.