Schincariol for sale after all?
They may deny the rumour till Judgement Day but Schincariol’s refutations are beginning to sound a bit hollow. Relations seem to have turned from terse to sour between Schincariol’s thirty something owners, the brothers Adriano and Alexandre Schincariol and their cousin Gilberto over the past few weeks ever since the London Sunday Times reported in April 2011 that SABMiller was interested in buying Brazil’s number two brewer.
Apparently the two family groups are in dispute over whether to sell the company or take it to the stock exchange through an IPO. The company, in fact, has been seeking to improve its governance and formalise its processes in preparation for a stock market listing.
Brazilian media reported that Adriano and his brother Alexandre are the major shareholders of the privately-owned company, with a 51 percent stake, while the other branch of the family, headed by their cousin Gilberto Schincariol holds the remaining 49 percent.
Guess who has more of a motive to sell their stake? Brazilian media think it’s the brothers Adriano and Alexandre.
Schincariol controls about 11 percent of Brazil’s beer market, while AB-InBev has a share of about 70 percent and Heineken 7 percent. What is at stake is a sizeable share of one of the most profitable beer markets world-wide and the control of one of the few beer and beverage companies that is not yet connected to a multinational of the area. For 2011 Schincariol expects beer sales to rise 20 percent.
From what BRAUWELT International has heard SABMiller is the preferred buyer but in order to drive up the price Heineken has been invited to bid too. SABMiller has no foot in the Brazilian market whereas Heineken is keen to build a bigger platform by combining its Kaiser brewery with Schincariol.
Schincariol is for sale for about USD 2 billion, the Sunday Times reported. Call it a coincidence that Heineken said on 5 May 2011 that it got a EUR 2 billion (USD 2.9 billion) credit line to refinance debt and back acquisitions?
Given that interest rates have fallen to almost nil, credit for buying Schincariol will come cheap. That’s why USD 2 billion for Schincariol appears to be a very moderate estimate.
According to the Brazilian business journal Valor Economico, the group might be worth between USD 2.9 billion and USD 4.1 billion. Valor Economico also claims to know that the brothers have signalled they want much more – above USD 5.9 billion.
Last year, the EBITDA of Schincariol was reportedly R$ 434 million (USD 246.6 million). Revenues were R$ 5.7 billion (USD 3.24 billion), a growth of 12 percent over 2009. Net income rose 9.5 percent to R$ 2.9 billion (USD 1.65 billion).
Valor Economico says that the company’s debt is small, less than 1 x EBITDA.
Whether Schincariol will be sold or not has become a moot point among employees who have decided to take the rumour seriously and jump ship.
