SABMiller eyes Italy's Peroni for R5bn
May 5, 2003
By Ann Crotty
Johannesburg - SABMiller is at the top of the list of parties interested in acquiring one of the last large, independent, family-controlled beer groups in Europe, the Italian group Peroni. The speculated purchase price is €600 million (R5 billion).
Concerns that SABMiller, which is battling to turn around US beer giant Miller, might be taking on too much caused the brewer's share price to weaken last week before it recovered to close on Friday at R50,74.
Speculation about a pending SABMiller bid for Peroni gained momentum last week after Heineken secured control of Austrian beer group BBAG for €1.9 billion, representing an extremely expensive historic price/earnings ratio of 38 times.
Peroni, the second biggest beer group in Italy with a market share of 25 percent, is one of the last of the family owned beer assets in Europe. This makes it an extremely attractive target for the large beer groups, whose management teams appear to be involved in a constant state of consolidation that is creating ever-larger entities.
Interbrew, which was reported to be leading the field in the bid for Peroni, appears to have lost some momentum, leaving SABMiller in the front slot.
On Friday Nick Chaloner, the communications director at SABMiller, said he was not able to comment on market speculation but did acknowledge that for some time the group's strategy had been to play a role in the ongoing consolidation of the global beer industry
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One analyst said Peroni had been on the market about two years ago and was reported to have been involved in negotiations with SAB at the time. However, the family withdrew the sale when the offers failed to match their expectations.
Because the company is private there are no sales or profit figures available, but on Friday one fund manager said he was concerned that SABMiller would be lured into paying a hefty premium on earnings because of the desire not to be left out of the consolidation process.
He said the deal would make more sense for either Heineken or Interbrew, both of which already had operations in Italy and so could squeeze synergies out of a high-priced acquisition.
Peroni had two brands in Italy and both had been losing market share in recent years, so this acquisition would be a smaller scale version of the turnaround challenge SABMiller was facing in America, said the fund manager.
He added that an acquisition would only make sense for SABMiller if it picked up the Italian brewer cheaply, but that this was unlikely to happen.
On the upside, one analyst noted Peroni had a strong brand that could be exported around the world and that despite its loss of market share the Italian beer market was one of the few developed markets that had been growing in recent years.
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