SA shareholders were the big winners in AB InBev-SAB deal
ABI paid a premium price to SABMiller shareholders in 2016, a valuation the company is still battling to match
As long ago as the mid-1990s the former CEO of SA Breweries, Graham Mackay, seemed to have worked out in fine detail how the consolidation of the global beer market would play out.
It’s impossible to know if Mackay, who passed away in December 2013, would have anticipated a little-known South American company emerging as the dominant global player at the end of the 25-year consolidation process.
But it’s difficult not to imagine that while SAB did not emerge as the ultimate industry dominator, the SAB shareholders may have won more than most of the other shareholders involved in the process.
Legend has it that Mackay, who drove SAB’s remarkably successful internationalisation strategy, had achieved some success in discussions with the Heineken family that could have created an unassailable merged entity. And presumably it would have done so without the need to spend many billions of dollars buying the top position. Nothing came of those discussions after Mackay’s premature passing.
But as AB InBev battles to ease the hefty debt burden it took on after the $100bn SABMiller acquisition in 2016, it’s difficult not to feel that our local beer giant, or at least its shareholder base, was the overall winner of the consolidation process.
Conditions in the funding market and in the beer-drinking market have become tougher since the audacious mega-deal. AB InBev’s hopes of using valuable brands to extract more profit from beer drinkers are not being realised.
And the plan to list part of its Asian business in Hong Kong will only ease part of the debt pain; more dividend cuts are likely to be on the cards. Meanwhile on the JSE the AB InBev share price has consistently failed to match the premium price paid to SABMiller shareholders in 2016.