| Mon 8 Mar 2004, 12:06 | | SABMiller down a peg after Interbrew merger |
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SABMiller down a peg after Interbrew merger
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Consumer Industries Editor
CAPE TOWN Last week's merger between the world's third-largest brewer, Interbrew, and South American beer giant Ambev to create the world's secondlargest brewer has knocked SABMiller down the rankings to the third-largest brewer in the world.
But SABMiller's share price, which slipped 10p to 570p in London at the beginning of last week, recovered most of its losses to end the week at 578p as the view took hold that Interbrew had overpaid.
In SA, SABMiller's share price gained 140c during the week to end at R71,10, reflecting rand strength.
The Interbrew-Ambev merger has created a formidable force in South America, a continent in which SABMiller, which has made developing countries its speciality, has no presence yet. It has operations in El Salvador and Honduras , but these are predominantly in carbonated soft drinks rather than beer.
If SABMiller has plans to expand in South America, the creation of a new force in the region presents a challenge.
Only six months ago, in an interview with the Financial Times, SABMiller CEO Graham Mackay said the group constantly assessed opportunities for expansion, which included looking at opportunities in South America.
Industry insiders had been aware of the negotiations between Ambev and Interbrew for at least 18 months.
SABMiller's plans may not be frustrated by the Ambev-Interbrew deal, but after the last few years in which it has made a spate of acquisitions, including the massive Miller Brewing of the US, it may be annoyed at being knocked down a notch in size.
This is an industry in which volumes are critical for driving down costs.
An SABMiller spokesman last week declined to respond, saying it would not be appropriate for the group to comment on the transactions of other companies.
On previous occasions, though, the group has said it is more interested in profitability than size.
But the trend of global consolidation in the beer market is not over yet.
There are recurring rumours that SABMiller and Britain's Scottish & Newcastle could make a match.
SABMiller is also known to be shopping in Europe.
Spain is one possible market where beer consumption is growing and the group was said last month to be one of a number of potential bidders for the 53,81% stake in Bosnia's biggest brewery, Banjalucka Pivara, put up for sale by the Bosnian government.
Mar 08 2004 07:37:46:000AM Charlotte Mathews Business Day 1st Edition
