Delta parent company sold for US$104 billion

SABMiller which owns Zimbabwe’s leading beverage concern, Delta Corporation has agreed to sell itself to Anheuser-Busch InBev for US$104 billion in a deal that will be the biggest takeover of a British company.

The takeover is also one of the top five deals in corporate history, and will create a brewing empire that will make about one-third of the world’s beer. AB InBev is already the world’s biggest brewer, and SABMiller is its closest rival.

According to media reports the boards of the two companies said they had reached agreement “in principle” on the key terms of a “possible recommended offer” after SABMiller rejected repeated approaches by AB InBev over the past month.

Delta Corporation last week reported a mixed performance in its beverage categories for the second quarter to September. In a trading update, the group said lager beer volume was five percent up on prior year for the quarter, mainly driven by the economy segment.

Total volume was down two percent for the six months. Sparkling beverages were down 14 percent compared to the same quarter last year and down 15 percent for the six months. “This is partly due to increased competition particularly from imported lower priced alternative offerings,” said Delta.

The Maheu and dairy mix beverages recorded a growth of four percent for the quarter on the back of improved product supply and the expansion of flavours. The sorghum beer category recorded a volume decline of 12 percent for both the quarter and the six months.

There is a marked shift to Chibuku Super which benefited from the additional production capacity from the Fairbridge Brewery. The group said revenue was down six percent for the quarter and down eight percent for the six months, reflecting changes in the portfolio mix and the recent price moderations.

According to the Guardian.com, London-listed SABMiller said AB InBev which brews Budweiser and Stella Artois is proposing to pay US$67 a share in cash.

It also offered a partial share alternative structure for 41 percent of the company owned by SABMiller’s two biggest shareholders – Altria, the maker of Philip Morris cigarettes, and BevCo, owned by Colombia’s billionaire Santo Domingo brewing family.

The US$67 cash offer values the maker of Peroni and Grolsch at about 50 percent more than its value on 14 September, before news of AB InBev’s interest leaked.

If all the shares were sold for that price it would value SABMiller at about US$108 billion but the US$59,4 part-share alternative, devised for tax reasons, brings the valuation down to US$104 billion.

AB InBev had until 5pm on October 14 to lodge a formal bid after having five previous proposals turned down, including a US$65,4-a-share approach on Monday.

SABMiller has asked the takeover panel for an extension to that deadline so the two sides can work out details. The new deadline for AB InBev to make a firm offer is October 28. Financial Gazette