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14 May 2003 By Rob Cox Follow @rob1cox

What is it about brewers that compels them to bid up and overpay for assets, as SAB has done with Italy’s Peroni? To make this deal work for shareholders, SAB will have to find a way of selling Peroni’s beer through its global distribution channels.

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SABMiller said it agreed to acquire a controlling stake in Peroni, valuing the Italian brewer at E563m. SAB will acquire from 51% to 60% for E246m in a first stage, and the remainder will be subject to put and call agreements that will see the group take 100% of the Romebased company by 2008. Peroni had E153m of net debt.

Peroni is Italy's secondbiggest brewer after Heineken, with a 25% market share. It had 2002 revenue of E494m and adjusted ebitda of E45m. SAB said it expects cost cuts of E9m by the third year. Peroni is being sold by fifthgeneration descendants of its founder.

Lehman Brothers advised Peroni and Citigroup advised SAB.

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