SAB on the prowl

Question: How do you bring up your share price? Answer: By starting a rumour that there is a merger or take-over in the offing. South African Breweries (SAB) reported first half pre-tax profits down to US$310 million from US$319 million on turnover down to US$2.11 billion from US$2.98 billion for the period ending 30 September 2000.
Its share price immediately went up when a rumour started making the rounds that SAB would form some kind of partnership with Belgium’s Interbrew. That took analysts by surprise who still had not digested the news that sales volume declined 6 % in South Africa due to a subdued economy and a shift in consumer spending. SAB’s management also hinted at a possible IPO (Initial Public Offering) to fund further acquisitions..

Cost reductions in South Africa are underway where a decline of the rand versus the US dollar as well as high oil prices have depressed sales and boosted costs. In the meantime, SAB announced that it was going to buy three breweries in China for US$67 million, bringing up its total number in China to 11 breweries.