AB InBev enters SAB mega-deal on a solid footing 30 Oct 2015 The Budweiser brewer has upped guidance on revenue. Costs are also rising because AB InBev is selling more fancy beers. Ahead of its $105 billion deal with SABMiller, the world’s largest brewer must spend on new products and markets as well as buying rivals in order to secure growth.
SABMiller’s Budweiser fightback lacks punch 9 Oct 2015 The Peroni brewer’s promise to find $550 mln of new cost savings by 2020 is paltry in the context of the $100 bln approach from AB InBev. SAB might have more powerful defences in its locker. It had better, if it wants to stay independent from the Budweiser brewer.
SABMiller’s best defence: debt and deliverability 8 Oct 2015 The Peroni brewer has leverage in the face of AB InBev’s aggressive $100 bln bid approach. It could gear itself up instead of letting the suitor take the spoils. It is also hard to see how the bidder could deliver value from SAB’s various partnerships without the board on side.
Only beer goggles make AB InBev deal look right 8 Oct 2015 Cost savings in previous brewery mergers suggest the Budweiser maker is far from covering the 37 pct premium in its $100 bln offer for SABMiller, based on Breakingviews calculations. Sales growth and disposals might help. Sweetening the bid, however, is a tall order.
SABMiller’s growth focus raises Budweiser stakes 6 Oct 2015 The South African-born brewer used the G-word six times in the first three sentences of an ostensibly ordinary Q2 trading statement. The intention looks clear. Seven days ahead of Anheuser’s deadline to launch a formal $100 bln-plus offer, SAB is saying: pay up or shut up.
Starbucks serves up a tepid brew in Johannesburg 27 Jul 2015 The coffee giant has been blitzing China, but its move into South Africa is more cautious. Although the country offers a growing middle class, GDP growth is slowing. And too few Africans can afford the “Starbucks experience” for rapid expansion across the continent.
SABMiller’s Coca-Cola push is Africa buy signal 27 Nov 2014 The UK brewer and the U.S. drinks giant are merging assets in southern and eastern Africa to create a soft-drinks bottler with $3 bln of sales. SAB gets control and gains market access. The move points to the continent’s strategic potential, and similar consolidation could follow.
South Africa’s bank bail-in better than Portugal’s 11 Aug 2014 A public bailout for reckless ABIL is sub-optimal. But unlike Portugal’s BES rescue, senior creditors will take some losses. And while taxpayers remain exposed to the new bad bank, the political desire to maintain lending capacity to poorer citizens is understandable.
Anglo may struggle to make clean platinum break 21 Jul 2014 The UK-listed miner’s South African unit wants to sell high-cost mines that account for a quarter of platinum production and half of the workforce. It’s a sensible move for Anglo, but the politics are fraught. If the buyer gets into trouble, Anglo might end up back on the hook.
Woolworths pays too-steep ransom in Aussie battle 24 Jun 2014 The South African group is buying billionaire Solomon Lew’s stake in an Australian unit in return for his support in its $2 bln takeover of retailer David Jones. The $201 mln side deal lifts the effective takeover premium – raising the pressure on Woolworths to realise synergies.
Aussie billionaire has least to lose in retail war 19 Jun 2014 Solomon Lew’s purchase of 10 pct of retailer David Jones could scupper a $2 bln takeover by Woolworths. The move may be an attempt to force the South African group to raise its bid or buy the retail veteran’s shares in another subsidiary. The two companies have the most to lose.
Review: China gives Africa handy investment lesson 6 Jun 2014 Howard French’s new book paints an unflattering picture of the PRC’s heavy involvement in Africa. But China’s presence is not all bad. At a minimum, it gives African governments and businesses a benchmark for other offers now that the continent is attracting Western interest too.
BRICS bank: a good idea that can do grave harm 6 Jun 2014 Brazil, Russia, India, China and South Africa are sponsoring a World Bank clone. The new lender could ease the infrastructure deficit in emerging markets, but could also end up backing social and environmental disasters. The bank’s governance will decide if it’s a boon or a bane.
South Africa needs neighbors’ growth rates 1 May 2014 Two decades after Nelson Mandela became president, the post-apartheid generation will vote for the first time in the May 7 election. The ANC represents his political legacy, but that’s undermined by the party’s weak economic results. Maybe the “Born Frees” can help change that.
EM rate hikes aren’t enough to scare FX traders 29 Jan 2014 Turkey’s hefty rate rise gave the lira only fleeting respite. Traders scoffed at a smaller South African rate hike. Euro zone bond vigilantes folded at the ECB’s commitment to preserve the euro. But FX traders look set to test central banks’ capacity to defend EM currencies.
Western debt magic is poison for Africa 24 Dec 2013 A poor continent with limited savings is hugely vulnerable to a credit crunch. Africa desperately needs capital, but only the sort that can’t easily leave. Speculative investors and yield-hunters will eventually do more harm than good. There’s a caution here for Bob Diamond.
Mandela’s successors can shape his economic legacy 10 Dec 2013 As world leaders remember a great statesman, they may ponder South Africa’s middle-income trap. Compared with other post-colonial economies, even stagnation would be a tribute to Mandela’s peace-making. It’s up to those who followed him to buck recent trends and escape the trap.
South Africa looks like grim shadow-BRIC 29 Aug 2013 The country is sometimes listed as a near member of the group of developing world giants. Alas, it comes close in the wrong direction: Russia’s one-party rule, Brazil’s corruption, China’s spiraling labor costs and India’s inefficiency. It desperately needs a better growth model.
S. African miners have few options in wage talks 11 Jul 2013 In a healthy industry, prices of goods should support the cost of decent wages. In South Africa’s mines, a toxic mix of deprivation, politics and geology creates underinvestment and angry workers. With the prices of key metals falling, it’s hard to see the dynamic changing.
South African economy bogged down in old politics 30 May 2013 Real GDP didn’t even manage a 1 pct growth rate in Q1. That pales next to star economies like Ghana’s. Mining rebounded but manufacturing fell. While emerging near-neighbors are welcoming foreign investment and small business, South Africa’s leaders are reliving past battles.