Spurned SABMiller sparks new round of M&A speculation
It was so Hollywood teen movie-ish: boring, unattractive and never-been-kissed geek makes pass at gorgeous high school prom queen in front of the whole class and gets brushed off.
That’s one way to look at SABMiller’s futile offer for rival brewer Heineken, which was rejected as “non-actionable” on 14 September 2014. Although some media say that SABMiller has had its eyes on Heineken for a while, it has never succeeded in eliciting as much as an encouraging smile from the Dutch. Still, SABMiller decided that finally the time had come to publicly hit on Heineken.
As could be expected, Heineken gave SABMiller the fluff, which made SABMiller’s whole approach look “clumsy” as one industry observer said, who was quoted by the UK’s Sunday Times newspaper.
Why, oh why, did SABMiller try to get off with Heineken? Was it in an effort to “bulk up” (the finance industry’s jargon for making oneself too big to be taken over) to prevent a takeover by AB-InBev, as was widely guessed? Or was it merely a very shrewd move to boost its share-price, as we at BRAUWELT International prefer to see it?
Whatever SABMiller’s reasons, the side-effect of SABMiller’s demonstrative signal that it’s “in play” – meaning it’s out on the prowl – is that the chasing pack of brewers has been forced to rush to the sand pit, too.
After an agonisingly long lull in M&A activity in the brewing industry, which has made analysts involuntarily idle and fear for their jobs, second and third tier brewers have suddenly woken up with a jolt, realising that there could be things in it for them as well, like superfluous brands and territories, should SABMiller decide to go after another big player.
While a tie-up between AB-InBev and SABMiller would lead to few required spin-offs – there’s hardly any geographical overlap between the two and by extension competition concerns – most other imaginable combinations certainly would.
In June already, City bankers began airing the suggestion that SABMiller could merge with Diageo, the world’s major drinks company and brewer of Guinness. This idea was actively pushed by Barclays bank this summer, says The Sunday Times. Barclays argue that such a deal would create “a credible alternative” to an AB-InBev-SABMiller transaction.
At the behest of second and third tier brewers, analysts in New York and London are already busy cooking up potential takeover scenarios, whose fall-outs could lead to a mad scramble for the tastiest bits among the by-standers.
Even if a takeover of SABMiller by the world’s number one brewer remains the most likely outcome, according to many City pundits, SABMiller’s recent offer for Heineken has at least made sure that the rumour mill in the brewing industry is not going to run dry any time soon.
And, who knows, if life is really going to imitate fiction, the geek may get lucky and pull his girl after all.
