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Analysts see SAB drinking with Anheuser
An offshore listing would allow the brewer to retain an empowerment-partnered company
at home, writes MARCIA KLEIN
Widespread rumours on SAB's future owner have included anyone from small empowerment group Maluti Foods to Anheuser Busch, one of the world's largest brewers. SAB, with a market capitalisation of R36-billion (even after the share has slipped rather dramatically), is huge by anyone's standards and is also one of SA's few world-class companies. It is among the top handful of brewers in the world, and its international expansion has been highly successful. Rumours of a new major shareholder have been sparked by uncertainty over the 29% of SAB held by Bevcon, which, in turn, is largely held by Liberty Life, Johnnic and Anglo American. Both Johnnic and (surprisingly) Liberty have indicated that SAB is not necessarily in their long-term plans. SAB corporate finance and development director Malcolm Wyman declines to respond to the rumours, saying there are so many in circulation at the moment that he would have to spend all day answering them. He says most relate to the stakes held by shareholders in SAB, so SAB is in no position to comment on them. "What I can tell you is that management is not in any discussions." Management is, however, involved in a strategic review, which is a continuing process. He says most of the non-core assets have been disposed of, leaving SAB with two major non-beer assets, Edgars and Plate Glass & Shatterprufe Industries. Their future forms part of the strategic review. There is no specific timetable, and announcements will be made if and when decisions are taken. Analysts say there are big plans afoot at SAB. "I have grounds to believe Anheuser is interested," one said, adding that SAB has also talked to Grolsch, Interbrew, Diageo, Carlsberg, and Heineken, not merely about a passive investment or industry matters. "They're talking about bigger and more extensive things - joint ventures, a London listing, a buy-out. But with the share price fall, some optimism may have been dampened." Market talk seems to indicate that a major international brewer (Anheuser is the clear favourite) would secure a stake of about 25% via Bevcon. Anheuser has been known to have an interest in SAB for many years, but has been unable to enter the market because of SAB's dominance. While Anheuser has expanded outside of the US, its volumes are predominantly in the US and it needs diversification into areas which are showing more promising growth. A possible scenario, and one which analysts have warmed to, is that SAB takes on a primary listing in London in partnership with Anheuser, and sells off part of its local operations. This will see it focus on its offshore expansion, which has been so successful to date. This, says one analyst, also leaves SAB free of the interference it is experiencing in SA (for example new competition law and the possibility of more restrictions on advertising), which will only intensify over time. A London listing would probably take place after SAB had sold off all of its non-core interests. Analysts believe these will include the struggling Edgars group and Southern Sun, the hotel chain which is operating relatively well after having turned around some years ago. They are not sure what will happen to Plate Glass, which is also a significant player offshore and which one analyst says has "blue sky potential". Analysts say they are not sure why it has taken SAB so long to sell its wine and spirits interests, which are merely strategic holdings.
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