InBev AmBev etc
UPDATE 3-SABMiller eyeing Colombia brewer Bavaria - source
Thu Jan 20, 2005 12:11 PM GMT
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(Adds more details on valuation, background and shares)
By Mark Potter and David Jones
LONDON, Jan 20 (Reuters) - London-based SABMiller (SAB.L: Quote, Profile, Research) (SABJ.J: Quote, Profile, Research) is one of a number of international brewers looking at buying South America's second-biggest brewer, Grupo Empresarial Bavaria (BAV.CN: Quote, Profile, Research) , an industry source said on Thursday.
"It is true that they (SABMiller) are involved. But it is also true that probably almost every other big international brewer is involved as well," the source told Reuters.
Colombia-based Bavaria has a market value of $2.8 billion with net debt of $1.9 billion, giving the business a value of $5 billion-plus after some bid premium. The FT.com Web site said earlier on Thursday that Bavaria could fetch about $9 billion but analysts said this figure seemed high.
A spokesman for SABMiller, the world's third-biggest brewer, declined to comment. Bavaria was not immediately available.
At 1130 GMT, SABMiller shares were down 2.7 percent at 808 pence, the biggest fall on the FTSE-100 index of blue-chip UK companies. There was concern the brewer of Miller Lite, Castle and Pilsner Urquell beers might overpay.
Bavaria is the largest remaining independent brewer in South America after Interbrew's takeover of AmBev last year to form InBev (INTB.BR: Quote, Profile, Research) . It is the virtual monopoly brewer in Colombia, Peru and Ecuador, while it has a business in Panama.
Analysts said Bavaria, with its already high profit margins, is not obviously the type of acquisition SABMiller has favoured in the past, such as that of Miller in 2002 where it has had to arrest long-term market share declines in the United States.
Analysts at Dresdner Kleinwort Wasserstein said the reported $9 billion price appeared high. "This looks a high price, especially for a politically risky country such as Colombia," they wrote in a research note.
Bavaria, controlled by Colombian business magnate Julio Mario Santo Domingo, has been on a three-year acquisition spree which led to its dominant position in Colombia, Peru and Ecuador, but InBev's formation last year may has forced a rethink and prompted an auction.
TOP NAMES IN AUCTION
This auction has attracted the top names among world brewers, including the leading four -- Belgium's InBev, U.S. Anheuser-Busch (BUD.N: Quote, Profile, Research) , SABMiller and Dutch Heineken (HEIN.AS: Quote, Profile, Research) .
"It's effectively an auction for the business (Bavaria). It's likely to take weeks, months in fact," the industry source said, while other sources close to the deal said it might take several months or may never even come to a sale.
"Much depends of whether Bavaria's owner wants a stake in a any combined business. If he does then it may be difficult for some of the big brewers with their current structures to accommodate him," said one source close to the situation.
Industry researcher Canadean put Bavaria as the 14th biggest brewer in the world, brewing 22 million hectolitres in 2003, will behind leader InBev with 139.7 million hectolitres.
The global brewing industry has been consolidating for years as brewers look to take advantage of economies of scale and to enter fast-growing emerging markets to offset more sedate levels of growth in developed countries.
SABMiller has been on the acquisition trail since moving to London from South Africa in 1999, buying up Miller in 2002 and Italy's Peroni in 2003. This month it said it would welcome merger talks with Molson Inc (MOLa.TO: Quote, Profile, Research) if the Canadian brewer's planned merger with U.S. Adolph Coors Co (RKY.N: Quote, Profile, Research) fails.
But Molson and Coors sweetened their merger deal further, making it less likely that SABMiller would be able to strike a deal, prompting talk of SABMiller's interest in Bavaria.
SABMiller's only interest in Latin America came in late 2001 when it became the first global brewer to enter Central America in a deal that gave it control of the sole brewer in Honduras and a stake in the only brewer in El Salvador.
Founded by German immigrants in 1889, Bavaria was intent on a regional expansion policy through South America and said last March it aimed to become the world's seventh-largest brewer within three years.
A spokesman for Heineken declined to comment, beyond saying it was always looking at opportunities to expand. InBev and Anheuser-Busch were not immediately available. (Additional reporting by Marcel Michelson in Amsterdam) |
