Belfast Telegraph

SABMiller mulls £7bn bid for Foster's lager

By Alistair Dawber

The drinks giant SABMiller could become the latest big company to join the surge of mergers and acquisitions of recent weeks, after reports at the weekend suggested it may be about to launch a £7bn raid on Australia's Carlton & United Breweries, the beer- making arm of the Foster's Group.

SAB, the FTSE 100-listed producer of the Peroni and Grolsch lager brands, is said to be considering a bid for the maker of Foster's lager, which would also net it the hugely popular Victoria Bitter, a sponsor of the Australian cricket team.

SABMiller declined to comment yesterday but sources close to the company suggested that a bid, if one were to be launched, was not imminent.

The Foster's Group is planning to split Carlton from its wine businesses next April, but SABMiller may consider eight months too long to wait. Its interest would alert a number of other brewers, with Canada's Molson Coors and Japan's Asahi also potential suitors for the Australian business.

While Foster's is an iconic brand in the UK, SABMiller would also be attracted to the huge potential of Australia's domestic market, the biggest per capita consumer of beer in the world, and the promise of increased sales in a rapidly expanding Asian market. SABMiller, originally a South African company, enjoys strong sales in emerging markets and has found considerable growth in Asia, Africa and Latin America.

Any deal would also propel the group, which already makes more than 10 per cent of the world's biggest drinks brands, into a position from where it could challenge the industry's biggest players. If SABMiller does decide on any early tilt at Carlton, a successful takeover would add to the weight of merger and acquisition deals of recent months.

Despite the global economic uncertainty, deal-making has already topped $197bn (£127bn) so far this month and is on course to beat the August record of $260bn set in 2006, according to Thomson Reuters. Last week's $89.8bn total is the highest weekly total since last November.

The drinks sector has changed markedly in recent years, following a number of huge merger deals.

Two years ago, the Brazilian-Belgian group InBev paid almost $52bn for Anheuser-Busch of the US, creating the world's biggest beer company, Anheuser-Busch InBev, which makes Budweiser, Stella Artois and Staropramen. That deal followed the joint takeover by Heineken and Carlsberg of the British group Scottish & Newcastle, a former FTSE 100 company, in April 2008.

While a move by SABMiller could be months away, the US food giant Campbell Soup Company is thought to be plotting a bid for United Biscuits, the private equity-owned UK company which makes Hula Hoops and Jacob's Cream Crackers. A former constituent of the FTSE 100, United Biscuits was bought by buyout groups Blackstone and PAI Partners in December 2006.

SAB listed on the London Stock Exchange in 1999, before it acquired the US brewer Miller in 2002, changing its name in the process.

As well as producing a number of well-known brands on its own account, SABMiller is one of the world's largest bottlers for Coca-Cola.

Belfast Telegraph