Interbrew ponders £4bn SA bid

BELGIAN brewer Interbrew has confirmed it is considering a bid for South African Breweries that will create a global giant worth £11bn.

Interbrew said it had run a preliminary analysis that may or may not lead to an offer for London-listed SAB, but said no approach had yet been made.

The Belgian brewer of Stella Artois will probably have to pay at least £4bn, but such a transaction would create a close second-runner in size to Anheuser-Busch of the US and reshape the global beer market.

An Interbrew-SAB merger will be less likely to raise competition concerns than one with other potential partners as SAB mostly operates in Africa and other developing regions. Its expertise in such areas, particularly in China, is what makes it attractive to the Belgian group.

Interbrew is still in the process of offloading Carling in Britain after being forced to sell it by European regulators who took a dim view of its Bass Breweries takeover.

Reports said Interbrew had identified post-tax synergies of e1.5bn (£936.5m) from a combined group. Shares in SAB surged 35 1/4p to 478p - an 8% leap - making it the biggest percentage riser on the Footsie.

Interbrew's shares in Brussels fell by e1.2 to e28.2 as investors digested the risks of the £7.5bn capitalised group taking on its smaller peer. SAB's stock market capitalisation is £3.7bn.

Any bid for SAB will have to win the blessing of four major South African shareholder blocks, including SAB itself, which holds a 10% stake for use as a possible obstacle to a hostile bid. The South African State pension fund holds 9.7%, while pension fund managers Liberty and Old Mutual own 7.2% and 5.4% respectively.

Castle is SAB's biggest-selling brand and sponsors its home country's national rugby team. It also holds the rights to Carling Black Label, Amstel, Hofbrau and imported Heineken in many African markets.

In China, where it has eight breweries, the group's leading brand is Snow beer and its related Snow Dry and Snow Premium. The best-known brand in Europe is Pilsner Urquell.

Interbrew said the analysis was part of its 'routine annual review of the leading brewers'. Reports said the Belgian group could be considering a deal as a spoiler to a feared megamerger of S&N, Miller Brewing of the United States and SAB.