Groupe Castel is not for sale
Groupe Castel, originally a wine business, was founded in 1949 by nine brothers and sisters and is still run by its founding president Pierre Castel, 84. It branched out into beer and soft drinks in Africa, the Caucasus and Vietnam. The breweries in Vietnam and Azerbaijan have since been sold.
Although Mr Castel seems to have reduced his involvement and put his nephew in charge there has been no indication that the controlling family might sell.
Analysts rightly believe that a SABMiller-Castel link-up would make strategic sense with SABMiller strong in southern and eastern Africa such as Tanzania, Zimbabwe and Mozambique, and Castel in western Africa nations, Ethiopia and Angola.
It’s a given that an acquisition of BGI would be an excellent strategic move for SABMiller, given the high margins and strong per capita beer consumption growth in Africa.
In 2001 Castel and SABMiller reached a strategic alliance whereby SABMiller took a 20 percent stake in the French group’s beer and soft drinks operations in Africa and Castel acquired a 38 percent stake of SABMiller’s African subsidiary.
It was reported that SABMiller has the right of first refusal if the business is sold.
This story underlines my argument as put forth in a report on the consolidation of the brewing industry published in this magazine in August 2010.
Bankers usually have quite a few deal fantasies written up in their little books. What happens next is that their deal scenarios are leaked to the media. Journalists, who love vamping up a good rumour, will then do their best to give executives of the target company plenty of sleepless nights – until they succumb to an offer and the fantasy becomes a fact.
Unfortunately, building up pressure via the media only works if the target company is a stock market listed company whose shares are spread widely and whose shareholders may be swayed by the prospect of lots of money.
In this case, however, the analysts’ suggestions fell on deaf ears as Mr Castel does not have to answer to shareholders. He owns the company.
That should teach the bankers a lesson.
