After buying SABMiller, AB InBev could see more deals
- Top 10 News for 10/17 - 10/21: Merger Rumors Abound; CEOs Depart; Tesla Kicks Autopilot Up A Notch
- Wall Street ends little changed; Microsoft hits record
- AT&T (T) in Advanced Talks to Acquire Time Warner (TWX) - DJ
- Rockwell Automation (ROK) Said to Attract Takeover Interest from Schneider Electric - Source
- British American Tobacco Offers to Acquire Remaining Shares of Reynolds American (RAI) for $56.50/Share
Find out which companies are about to raise their dividend well before the news hits the Street with StreetInsider.com's Dividend Insider Elite. Sign-up for a FREE trial here.
By Martinne Geller
LONDON (Reuters) - Once Anheuser-Busch InBev (NYSE: ABI) seals its 79 billion pound ($104.8 billion) takeover of rival brewer SABMiller (NYSE: SAB), it could find itself party to other smaller deals, involving Castel Group, Coca-Cola (NYSE: KO) 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 ($7.9 billion), 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
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
($1 = 0.8915 euros)
($1 = 0.7541 pounds)
(Additional reporting by Sophie Sassard in London; Editing by Stephen Powell)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Ecuador judge orders jail for ex-minister in Petroecuador bribery case
- Half of Republicans would reject election result if Clinton wins: Reuters/Ipsos
- FBI investigating cause of cyber attacks: law enforcement official
Create E-mail Alert Related CategoriesReuters
Related EntitiesWarren Buffett, Sanford C. Bernstein
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!