| Mon 14 Mar 2005, 14:29 | | SABMiller may have new target |
|
Post to the web on: 14 March 2005
SABMiller may have new target
Charlotte Mathews
--------------------------------------------------------------------------------
E-Mail article Print-Friendly
Consumer Industries Editor
CAPE TOWN — Global brewer SABMiller’s share price has fluctuated between a low of R87,80 and a peak of R97,65 in the past two months on currency volatility and speculation that it is a front-runner to make a bid for Colombia-based brewing giant Grupo Empresarial Bavaria.
The group’s share price is affected by dollar swings because a large portion of its income is earned in other currencies, such as the rand and the euro.
Between early January and mid-February both the rand and the euro weakened against the dollar and then recovered to previous levels, causing a similar blip in SABMiller’s share price.
The SABMiller share has also been buffeted by speculative reports since the end of January that it is one of a handful of global brewers lining up to make a bid for Grupo Bavaria.
UK newspaper The Observer said SABMiller would file a $6bn bid last week, but other reports said rival Heineken had made a firm offer of $9bn. Colombian regulators asked Grupo Bavaria on Friday to disclose details of talks following heavy trade in its shares, drinks industry website just-drinks.com reported.
Other brewers that have been rumoured to be interested include Scottish & Newcastle, Inbev and Anheuser-Busch.
Grupo Bavaria is the second-largest brewer in South America, and holds the leading beer brands in Colombia, Peru, Ecuador and Panama.
In the year to December its sales volumes from beer and malt beverages grew 4,6%, to 28,6-million hectolitres, over 2003. Sales of other beverages such as water, fruit juices and milk grew 5,4% to 5,8-million hectolitres.
Net sales income for the year grew 13,2% to $1,9bn and it improved its earnings before interest, tax, depreciation and amortisation margin to 41,9% (39,3%).
But it posted a bottom-line loss of $31m from a previous profit of $36m due to increased forex losses (most of its assets are dollar denominated), amortisation and hedging operations expenses, which offset improvements in operating income.
A local analyst said it was difficult to tell whether SABMiller would pursue a bid for Grupo Bavaria because it was not “a classic SABMiller acquisition”.
Grupo Bavaria is profitable, with high operating margins and market leadership. SABMiller’s previous acquisitions have typically been of underperformers.
Its attractions are that it would give SABMiller a strong presence in South America, which it does not have, and that South America’s beer market is expected to grow at about 5% a year.
Whether the purchase would be seen as positive for SABMiller depended on the price, the analyst said.
Some rumours have put the cost at $6bn and others at $9bn.
