Sechaba Brewery Holdings Limited and Botswana Development Corporation (BDC), two major interested local parties in the proposed takeover of SABMiller by AB InBev, this week refused to make their opinions (on the deal) known.
The transaction, if it gets the nod, will have sweeping implications on all investments of SABMiller the world over. Naturally, BDC an investor at Sechaba, a group part-owned by SABMiller, will be affected in one way or another should the deal go through as it has implications on BDC continued investments at the leading beer maker. Sechaba, a local unit of SABMiller, has also chosen to remain tight-lipped on the deal which may come with restructuring, de-listing, divestment and possible job losses. According to data sourced from Sechaba’s latest annual report, BDC owns 25, 59 percent of Sechaba.
The latter owns 60 percent of the operating company Kgalagadi Breweries Limited (KBL). SABMiller Botswana BV owns 40 percent of KBL while SABMiller Africa owns 16,84 percent of Sechaba. The rest of the shareholders of Sechaba shareholders own 57,5 percent of the group. Motor Vehicle Fund (MVA) and some local institutional investors have stakes at Sechaba which has seen its profit margins taking a nosedive on the backdrop of the alcohol levy and traditional beer regulations. Alcohol levy, which is currently sitting at 55 percent, was introduced to curb alcohol abuse in the country, but it has since hurt Sechaba profits. On the other side, traditional beer regulations have restricted the selling of Sechaba’s opaque beer.
SABMiller has a management contract of KBL. Under the SABMiller and AB InBev deal, which is the biggest in the brewing industry to date, the latter has put over $100 billion before the former as purchase price. SABMiller has agreed to the purchase price, but no formal documents have been concluded and signed.
The deal is subject to several regulatory approvals in jurisdictions where the two beer groups have operations. If it gets the nod, it will mean all assets of SABMiller, including its shareholding in Botswana beer making group, Sechaba, will fall under AB InBev. An investment arm of government, BDC has refused to comment on the latest multi-billion Pula deal. “We as a shareholder are not in any position to comment on this takeover you are referring to as it is yet a subject of discussions by Shareholders. Thus far, any discussions would have been at the SABMiller PLC level,” said Head of Communications of BDC, Boitshwarelo Lebang. Sechaba, which is listed on the domestic bourse, also indicated that it is constrained to comment, referring BG Business to a statement issued by SABMiller.
“I’m afraid at the moment there is nothing more we can say beyond that which is in our statement,” the group spokesperson, Mokoro Ketsitlile said in an emailed response on Tuesday. Across the border in South Africa, the deal has already met resistance among shareholders and trade unions. Public Investment Corporation (PIC), a pension fund manager for South African government said if the deal passes it will create a dominant brand that will hurt consumers. “Quite frankly I’m not in favour of it,” Chief Executive Daniel Matjila told Bloomberg news agency recently. “We may be creating some kind of a monopoly going forward which may have a serious impact on the global economy and beer market in general.” PIC owns just over 3 percent of SABMiller.
Congress of South African Trade Unions (COSATU) said in a statement that, “We will never allow a situation where the South African offices of SABMiller are relocated away from South Africa and the local revenues are spiraled out of the country to the detriment of the entire economy.” In a related matter, both SABMiller and AB InBev SABMiller on Wednesday extended the deadline for rival Anheuser-Busch InBev to make a formal $100 billion- plus takeover offer by a week. The two companies said in a statement on Wednesday that London’s Panel on Takeovers and Mergers had granted SABMiller’s request to push back the deadline to 17:00 on Wednesday, November 4. The Takeover Panel already granted a two-week extension from an initial October 14 deadline after the two parties said they had reached a preliminary agreement on a merger.