Capturing the Castel

7 October 2010 By Alexander Smith

The brewer clearly covets its French partner’s fastgrowing African beer assets, worth perhaps $9.5 bln. However, the Castel dynasty doesn’t appear in any hurry to sell. But with longstanding crossshareholdings, SABMiller is perfectly placed to engage in a long courtship.

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French drinks group Castel denied on Oct. 7 it was in talks with the world's second largest brewer SABMiller to sell its African beer business. The Times newspaper reported that the two companies were in talks about a deal worth more than $9.5 billion. This followed a Deutsche Bank report on Oct. 5 which suggested Castel was a natural target for SABMiller. SABMiller's shares were little changed following the Times report, rising less than 1 percent to 2010 pence.

Analysts said a Castel linkup would make strategic sense with SABMiller strong in southern and eastern African countries such as Tanzania, Zimbabwe and Mozambique, and Castel in western Africa nations like Angola, Cameroon and Ivory Coast.

Castel and SABMiller entered into a share swap in 2001 which gives the French group 38 percent of SABMiller's African business, excluding South Africa, and SABMiller 20 percent of Castel's African beer operations. SABMiller holds a right to first refusal if the assets come up for sale.

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