After pouring cold water on the idea of SABMiller fending off a possible bid from AB InBev by merging with Diageo, Societe Generale has now looked at alternatives.
One of the best bets, they say, would be for SABMiller to buy rival drinks group Castel, but even this might only put off the inevitable. They say:
We have gone beyond the consideration of whether AB InBev (ABI) will try to acquire SABMiller, given the lack of strategically viable alternatives. We have considered how SAB could try and put itself out of reach, as it did (for a while) by its acquisition of Foster's in 2011.
We have modelled seven possible deals that SAB could try to do, estimating the potential impact each one would have on SAB's acquisition enterprise value on our estimates – i.e. what ABI would have to pay.
One potential target – Castel, the privately-owned French-African beverage giant –would be one of the better fits strategically, would lift SAB's acquisition enterprise value by 34%, and would delay a potential bid from ABI for three to four years. But SAB cannot choose the timing of an acquisition, and such a deal would make SAB an even more attractive target.
Of the other deals, we consider – and reject –a potential merger with Diageo, which would be much less attractive to SAB's shareholders than receiving a bid from ABI. Buying-out its joint venture partners – Molson Coors in the Miller Coors US joint venture, and China Resources Enterprise in the CR Snow joint venture – is highly unlikely, in our view, when both stand to benefit from the enforced disposals that would be required if ABI acquires SAB. Acquisitions of San Miguel, Anadolu Efes, and Coca- Cola Amatil would be too small to delay an ABI bid by more than a year.
SAB is currently 12.5p lower at 3293.5p.
