SABMiller and Castel snuggle up to each other
About time too. On 9 January 2011, SABMiller announced that, after years of competing against each other in Nigeria and Angola, the two companies would combine the management in these two markets with SABMiller managing Nigeria and Castel Angola. In the rest of Africa, however, they will continue to go their separate ways.
SABMiller valued the gross assets of Castel’s Nigerian businesses at USD 75 million (which we think a very generous valuation) compared to USD 918 million for SABMiller’s Angolan businesses.
The organisational changes immediately fired deal fantasies, especially when a SABMiller spokesperson told Reuters that SABMiller would be interested in acquiring the African brewing operations of Castel should Mr Pierre Castel, the octogenarian owner, be willing to sell.
SABMiller and Mr Castel reached a strategic alliance in 2001 whereby SABMiller took a 20 percent stake in the Paris-based group’s beer and soft drinks operations in Africa, and Castel acquired a 38 percent stake in SABI, which is SABMiller’s Africa subsidiary.
At their recent meeting, the two companies agreed mutual pre-emptive rights over each others’ beverage operations in Africa, whereby each has first rights to buy each others’ operations if put up for sale, and SABMiller said these rights had now been "clarified and amplified".
"In the light of our overlap in Africa, we would obviously be interested in acquiring the Castel group’s interest in the strategic alliance," said a SABMiller spokesman.
However, there is no indication that the Castel family might want to sell its business which analysts have valued in excess of EUR 8 billion.
Still, it would make a lot of sense for SABMiller to pursue Mr Castel as such a deal would bring together Africa’s two biggest brewers. SABMiller is strong in southern and eastern nations such as Tanzania, Zimbabwe and Mozambique and Castel in the west in nations like Angola, Congo, Cameroon and Ivory Coast.
In true form, Mr Castel had no comment on SABMiller’s interest in his African business. All he said was: "After ten years of alliance, it was deemed appropriate to review and upgrade our partnership with a strong focus on synergies."
Groupe Castel was founded in Bordeaux in 1949 by nine brothers and sisters, including Pierre, and has become the largest wine producer in France, the number three wine group in the world and the second largest beer and soft drinks group in Africa.
