SABMiller finds traditional recipe for growth 14 May 2009 The intrepid beer giant just opened a brewery in Sudan. Such expansions are helping, but more conventional techniques brought most of the resilience in a tough year. Tight cost control and hefty price increases worked wonders and that was with ingredient costs at record highs.
AB-Inbev’s turn to curse the buyer’s market 7 May 2009 The brewing giant drove a hard bargain to buy Budweiser last year. Now it's on the end of one. KKR has snapped up AB s Korean business, Oriental Brewery, for $1.8bn but thanks to a heap of concessions it had to make, the actual price looks about 15% lower.
Bottlers could squeeze just a bit more from Pepsi 4 May 2009 Pepsi Bottling snubbed PepsiCo s $4.2bn offer for the remaining twothirds of the company. It has a point: the offer values it at a big discount to other bottling deals and there could be more synergies. But its fortunes are tied to Pepsi, so it doesn t have much leverage.
KKR’s next move could be new riff on old theme 28 Apr 2009 The US buyout firm is frontrunner to buy OB, South Korea's number two brewer and cashcow in a duopolistic market. It's like the olden days: the buyer shouldn't have to do much more than leverage it up and watch it go. But look out for some modern problems: financing and price.
PepsiCo’s $6bn deal brings bottling full circle 20 Apr 2009 The US beverage giant offered to buy the bottling companies it spun off in the 1990s. That should give Pepsi more control over its distribution, a smart move in light of its changed business. The bottling spinoff fad was based on financial engineering and has gone flat.
Pernod Ricard opportunistically cuts debt 8 Apr 2009 The French spirits maker is raising more than E1.4bn with a rights issue and the sale of its Wild Turkey bourbon whiskey. Why? Because of its toppy acquisition of Absolut Vodka in 2008. At least Pernod is among the first European corporates to be tapping shareholders to cut debt.
China’s blocking of Coke deal needs explanation 18 Mar 2009 If China feared the creation of a drink monopoly from Coke s $2.4bn purchase of Huiyuan it should make a convincing case. Otherwise it will appear to be employing a double standard. That would be damaging not just to Chinalco s Rio deal, but to future capital flows as well.
US IPO market re-learns to crawl 11 Feb 2009 The $720m float of baby formula company Mead Johnson shows the equity market is creaking open. The company increased the size of the offering and priced it at the top of the range. While good news, spinning out a profitable, noncyclical business is only a baby step to recovery.
Bud needs to fight to retain its fizz 3 Feb 2009 InBev, the new owner of America s favourite beer, has a mountain of debt to repay and assets to sell. The ruthlessly costconscious Belgian brewer has enough options to avoid a cash crunch but as growth slows, InBev s $62bn binge bears a distinctly topofthemarket flavour.
Creativity is key in new world of M&A 13 Jan 2009 Spirits giant Constellation just sold lowerend brands like Montezuma Tequila to focus on highermargin products. But getting a deal done with debt markets closed required creativity in this case a $60m loan to the buyer. That boosts its risk a bit but looks smart nonetheless.
Premier equity issue will be a tense affair 15 Dec 2008 The food group needs a big cash injection because it has too much debt, a legacy of an overpriced acquistion. But existing shareholders aren t certain to stump up, and banks will be reluctant to take the underwriting risk. A new anchor investor may be the best bet.
Bankers need to learn from bakers 27 Nov 2008 The baking business runs very smoothly. Bread is delivered in the desired quantities, technology advances (sliced bread was not the last word) and consumer tastes are satisfied. But add an “n” and the picture changes. As a business, banking is much less healthy.
AB Inbev’s rights offer highlights extraordinary cost of capital 24 Nov 2008 The beer company priced its $8bn sale of stock at a 69% discount. That s on top of a nearly 60% drop in the stock since the summer. Inbev is raising the cash to pay down Budrelated debt. Even wellpositioned companies have to pay steeply for capital in this environment.
Parmalat could give shareholders some cream 23 Oct 2008 After a $2.2bn suit against Citigroup turned into $360m of damages, the scandalhit milk group s shares dropped by 20%. Meanwhile, a goslow strategy has chilled investors. Maybe it s time boss Enrico Bondi considered a buyback before Parmalat becomes a bid target.
Citigroup victorious in Italian spilt-milk spat 20 Oct 2008 The lossmaking bank has little to cheer about. So beating a lawsuit claiming it abetted the fraud that led to Parmalat s collapse, and getting $364m in damages, is a welcome surprise. The dairy company is appealing but at least investors weren t pinning hopes on a megapayout.
Inbev drawn into Mexican stand-off 16 Oct 2008 The Belgian brewer has needled Budweiser s Mexican partner, Modelo, which says Inbev crossed a line when it bought the king of beers. It s hard to see how the Corona brewer has a case. Still, Inbev is likely to settle rather than risk a real shootout.
UK retailers get another thing to worry about 25 Sep 2008 As if the consumer downturn isn t enough, antitrust authorities seem to be stepping up their probe into alleged price fixing by food retailers and suppliers. There won t be a quick resolution. But potential bad publicity and fines are the last things the industry needs
Coke shows China is world’s worst kept secret 3 Sep 2008 Talk about bubbles Coke is paying a 200% premium for Huiyuan, a Chinese juice maker. The US firm should be able to squeeze value out of the $2.3bn deal. But the really juicy role goes to Danone, which has doubled the value of its investment in Huiyuan in two years.
Brown-Forman gets pricked by a cactus 28 Aug 2008 The maker of Jack Daniels paid up to buy Mexican tequila producer Herradura in 2006. Exactly two years later, it is learning that distilling and farming are different fortes, after an earnings miss caused by dead agave plants. Maybe it should have stuck to whiskey.
Diageo stress tests consumer refuges 28 Aug 2008 Go long on premium vodka and beer for Nigerians. That s the strategy of the world s largest drinks maker. Diageo is trying out the conventional wisdom of consumer industry rely on premiumisation and emerging markets. So far the model seems to be working.