AB-InBev hovers over SABMiller
What’s that supposed to mean? On Sunday 14 September 2014 Bloomberg news agency reported that, according to rumour, the world’s number two brewer SABMiller had approached the world’s number three, Heineken, with a takeover offer.
Bloomberg said that the offer was made in the past two weeks. However, late at night on the same day, Heineken issued a statement saying that it had turned down the offer because it intends to remain independent.
Heineken’s statement reads: “Heineken has consulted with its majority shareholder and concluded that SABMiller’s proposal is non-actionable.”
Heineken’s largest shareholder is the Heineken family. The family itself has informed SABMiller of its intention to preserve the heritage and identity of Heineken as an independent company. “The Heineken family and Heineken’s management are confident that the brewer will continue to deliver growth and shareholder value”, the statement concluded.
That Heineken would rebuff SABMiller was to be expected. All of Heineken’s past deals were structured thus that the Heineken family would stay firmly in control of the brewer.
This is what SABMiller would have known too. So why did they approach Heineken nevertheless? The answer is simple: This move made SABMiller’s share price shoot up and the brewer even more expensive for any predator. The following day and within a few hours, SABMiller’s share price rose 12 percent.
Many analysts regarded SABMiller’s offer for Heineken as either an attempt to fend off a potential bid from AB-InBev – by making itself too big to swallow – or to force AB-InBev to show its hand.
Market observers say that SABMiller so far has played its cards well. Since the rumour earlier this year that the world’s number one brewer AB-InBev has set its eyes on the number two gathered momentum, SABMiller’s share price has only gone up.
Even if no offer from AB-InBev for SABMiller materializes for months, investors who placed their bets on SABMiller’s stock rally will have already profited nicely.
Incidentally, AB-InBev’s share price also picked up on 15 September. Insiders say this indicates that the financial markets want a deal between AB-InBev and SABMiller.
SABMiller has a market capitalisation of USD 89 billion, and any buyer would likely have to pay a premium of about 30 percent, analysts say. This gives SABMiller a price tag of USD 120 billion.
