Stock Talk: SABMiller takeover likely to be a long time brewing

20 September 2015 - 02:00 By Ann Crotty

AB InBev's bid for SABMiller could go remarkably smoothly and be done and dusted within six to 12 months of an actual offer being put on the table (that excludes the implementation, of course). But chances are that even if SABMiller management decides to back the deal and even if all the major shareholders give the nod, this will be a drawn-out affair generating tens of millions of dollars for advisers along the way.SABMiller, which operates in 83 countries, has joint ventures or associates in about 40 of them. The big ones are CR Snow in China and MillerCoors in the US; less well-known are the 18 countries in which it operates with Anadolu Efes, as well as the 20 African countries in which it has relationships with Castel. This will add some complexity and time to finalising a transaction.Then there are the regulators. The deal will involve many countries, each of which will have regulators (not just competition but financial) which will want to put their stamp on it. Consider that, although there are no apparent competition issues in the South African leg of the deal, there could be public interest issues.story_article_left1Recall that there were no competition issues in Walmart's acquisition of Massmart, but that didn't stop Economic Development Minister Ebrahim Patel from intervening and dragging out that merger for a few extra years. Perhaps this time he'll be joined by Aaron Motsoaledi, our minister of health, who always seems keen for an opportunity to rein in the power of our alcohol industry.It's not impossible that the comparatively new competition authorities in Africa, excluding South Africa, might decide this is a good, high-profile opportunity to flex their muscles. Between them, SABMiller and Castel have done a lot of carving up of markets in Africa.And it's not inconceivable that some bureaucrat somewhere on the globe might decide that the beer industry is a national strategic industry that needs protecting. That might seem ridiculous, but remember that back in 2005 the French government decided its yoghurt industry was too important to allow Pepsi to acquire local champion Danone.Executives set to score on share optionsExecutives throughout SABMiller, but particularly at the very top, are going to score big on this deal. Given the much-commented-on likelihood that many of them will be culled by the reportedly extremely aggressive AB InBev team, they will want to ensure whatever share options they have are exercised at hefty premiums.Already, even before it's been formally proposed, we've seen Tony van Kralingen benefiting from the deal. On Wednesday, hours after SABMiller issued a cautionary statement advising shareholders to hold on, it issued a second Sens statement revealing that Van Kralingen had just sold 180170 shares at an average price of £36 (about R743) for a total of £6.5-million. Of course, if a deal is done at the speculated £40 plus, Van Kralingen will be a lot worse off.Seems he had no choice. About a month ago, Van Kralingen, due to leave the company at the end of the year, entered into a share-trading programme to sell 50% of his SABMiller shares following advic e he should diversify his portfolio. Once begun, these programmes can't be altered. The £36 price triggered the sales.Of course, last week's developments do bring us closer to unbundling the largest company in the world to make really bland beers.Can it be many years from now before we see a craft beer-enriched SAB back home?story_article_right2Marcel Golding's magical mystery disappearanceEarlier this year, there was a considerable and understandable fuss at the KWV AGM about the fact chairman Marcel Golding had not pitched up for the company's board meetings.Amazingly, there were only two board meetings (one in November and one in March) - but he didn't pitch for either.Golding referred to challenges and "special circumstances" he had faced, intimating these prevented him from attending to his duties as chairman and director of KWV.Golding was alluding to the high-profile falling out with his long-term business partner Johnny Copelyn. Copelyn, who is also a KWV director, attended both meetings.Copelyn and Golding built up a substantial business group around HCI, a company that now has a controlling stake in a variety of interests, including KWV, Tsogo Sun, e.tv and Niveus. There was much sadness about the falling out between the two former trade-union colleagues and, perhaps for that reason, more tolerance than there should have been for Golding's non-appearance.And then, last week, Tsogo Sun released its annual report, also for the 12 months to end-March. Tsogo Sun shareholders will be relieved to know those "special circumstances" had little effect on his Tsogo Sun duties. The report reveals that Golding attended five of the six board meetings at that company. This is commendable but perplexing, given that Copelyn is chairman of Tsogo Sun...

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