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After buying SABMiller, AB InBev could see more deals

Published 12/09/2016, 07:17
Updated 12/09/2016, 07:20
© Reuters.  After buying SABMiller, AB InBev could see more deals
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By Martinne Geller

LONDON (Reuters) - Once Anheuser-Busch InBev seals its 79 billion pound ($104.8 billion) takeover of rival brewer SABMiller (LON:SAB), it could find itself party to other smaller deals, involving Castel Group, Coca-Cola and Anadolu Efes.

AB InBev, maker of Budweiser and Corona, already forged agreements to sell SAB's brands in Western Europe and its joint venture stakes in the United States and China to speed approval for one of the biggest deals in history. It also plans to offload SAB's assets in Eastern Europe, worth up to 7 billion euros (5.95 billion pounds), but has not agreed a buyer.

Besides those, SAB has a cross-shareholding with France's Castel Group that, three sources say, includes the first right to buy out the wine, beer and soft drink maker should it ever seek new owners outside the billionaire Castel family, helmed by Pierre Castel, who is nearly 90.

That right would transfer to AB InBev, they say, giving it a path toward potential full ownership of Castel, which some analysts estimate is worth more than $30 billion due partly to it being the second-largest beer and soft drink maker in Africa.

The continent, with its increasingly thirsty middle class, is one of the main drivers of ABI's takeover - expected to close in October following a shareholder vote on 28 September.

Castel, which also boasts wine estates in Morocco, Tunisia and Ethiopia, is "such a jewel in the crown," according to Liberum analyst Alicia Forry, that AB InBev would likely jump at the chance to own it.

"It's a very important relationship that we intend to continue to develop and evolve," AB InBev Chief Executive Carlos Brito told analysts last month when asked about Castel.

It is unclear whether Castel, whose business has been hurt by the recent economic crisis in Angola, will ever sell out. The company did not immediately respond to a request for comment.

BEER AND SOFT DRINKS

Aside from beer, which SABMiller has sold in South Africa since 1895, the brewer now owns 57 percent of soft drinks seller Coca-Cola Bottling Africa. Under an existing change-of-control clause, Coke will have the right to buy SAB's stake -- estimated to be worth as much as $4 billion -- once the takeover closes.

Coke declined to comment on its intentions but several analysts, including Bernstein's Trevor Stirling, believe it will buy the stake, in part to keep ABI away from its door.

With no more room to grow in beer, chatter among bankers has turned to whether the mega brewer will eventually move into soft drinks, a step that could put Coke at the top of its list.

"They know they're potentially next on the menu and the idea of them having a potential hostile acquirer as your key partner in Africa is not something I think will sit well with Coca-Cola," Stirling said, noting also that AB InBev is a large PepsiCo (NYSE:PEP) bottler in Latin America.

"So even if they weren't a potential acquirer ... that in itself would sit uneasily," he added.

A takeover of Coke - which has a market value of $188 billion - would be of unprecedented scale, even for the renowned dealmakers at AB InBev. Yet a growing relationship between AB InBev backers 3G Capital and major Coke shareholder Warren Buffett have led some fee-hungry bankers to imagine the legendary investor lending a hand, as he did when 3G Capital bought Heinz in 2013.

One other remaining asset is SABMiller's 24-percent stake in Turkish brewer Anadolu Efes, which is worth about $930 million, based on its current share price.

According to the companies' arrangement, Efes is the only possible buyer for the stake, sources say, if AB InBev decides to sell it. Analysts say Turkey is not a top priority for AB InBev, but note that it could be interested in Efes's 50.3 percent ownership of Coca-Cola Icecek, which sells Coke drinks in 10 countries around the Middle East and Central Asia. AB InBev declined to comment on its future plans and Efes was not immediately available.

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