Tuesday, 20 November 2007

SAB Miller to buy Royal Grolsch

The world’s second largest brewer, SABMiller, has agreed to buy Royal Grolsch, the Dutch rival behind Grolsch lager. In its second major move on the international market in as many months, after agreeing to combine its American operations with those of Molson Coors, SABMiller is offering 48.25 euro per share, 84.3% above Grolsch's average closing price over the past month.

SABMiller, said that the management of Grolsch supported the offer, which values the Dutch company at 816 million euro (£582 million). As with earlier deals, SABMiller is paying a premium, offering almost 15 times the reported 2006 earnings before interest, tax, depreciation and amortisation.

SABMiller hopes to employ the Grolsch Premium Pilsner brand across Africa and Latin America, using it to tap into the lucrative premium segment of the market in those regions. In South Africa in particular, analysts expect the new member of the SABMiller family to help plug the gap after Heineken terminated SABMiller-subsidiary South African Breweries' licence to manufacture and distribute Amstel lager beer.

Yesterday's announcement also raised questions about SABMiller's position as a potential bidder for Scottish and Newcastle. Trevor Stirling, a beverages analyst at Sanford C. Bernstein, said “although I was almost certain SABMiller was interested in S&N, the balance of probability was against them making a bid. Scottish and Newcastle doesn't really have a well-known exportable brand like Grolsch. If SABMiller were to bid, it would be for the Russian assets and the 50% in BBH (Baltic Beverage Holdings)." (source: Google News)

Shares in Northern Rock plunged below £1 to an all-time low after Cerberus, the US private equity fund, walked away from making a rescue bid for the troubled mortgage lender as the market reacted to Chancellor Alistair Darling statement to the Commons yesterday. The Newcastle-based bank's shares fell 8 %t to 95.8p in early trading, valuing the group at £404 million. Just nine months ago, Northern Rock was valued at £5.2 billion when its shares reached a peak of £12.12 per share.

It emerged last night that Cerberus, one of four parties thought to be considering serious offers for the bank, has been put off making a concrete bid by continued turmoil in global financial markets. Its interest is also thought to have been affected by credit-related losses at GMAC, the former financing arm of General Motors that is now 51% owned by Cerberus. GMAC was expected to part-fund a Cerberus offer for Northern Rock.

The Government said yesterday that the line of credit that the Bank of England had extended to Northern Rock could not continue beyond February, because it would then contravene European rules on state aid.

Speaking before the Commons yesterday, Alistair Darling refused to give a guarantee that the £24 billion the Bank of England has so far lent Northern Rock will ever be fully repaid, leaving tax payers to foot the bill for the crisis. (source: Timesonline)

Luton Based low-cost airline, Easyjet, has seen annual pre-tax profits rise after carrying 37.2 million passengers in the year to 30 September. The Luton-based carrier said profits were up by 56% to £201.9 million ($431 million; 294 million euros), with its load factor, which shows how full flights are, at 84%.

In the past year Easyjet added eight destinations and 46 routes, bringing its network to 289 routes, using 77 airports in 21 countries. But it said rising oil prices meant the "fuel environment remains challenging".

Andy Harrison, Easyjet chief executive, said: "Despite challenging conditions, revenue, profit and return on equity have all shown strong improvements reflecting the success of our focus on low cost with care and convenience. At the same time as driving the financial performance of the business, our now well established management has also expanded Easyjet's network and fleet, which carried over 37 million passengers in the year, making the airline the fourth largest in Europe."

Easyjet said it expected to complete the £103.5 million purchase GB Airway by 31 January 2008. (source: BBC News)

No comments: