Bloomberg News

SABMiller to Gain Anadolu Stake After $1.9 Billion Exchange

October 19, 2011

(Updates with closing share price in sixth paragraph.)

Oct. 19 (Bloomberg) -- SABMiller Plc will transfer eastern European beer businesses valued at $1.9 billion to Anadolu Efes Biracilik & Malt Sanayii AS and take a stake in an enlarged company that will be Russia’s second-biggest beermaker.

SABMiller will exchange its Russian and Ukrainian units for a 24 percent holding in Istanbul-based Anadolu Efes, the companies said today. Anadolu Group will maintain control of the Turkish brewer with a reduced stake of 42.8 percent.

SABMiller, which last month agreed to buy Foster’s Group Ltd. for about A$9.9 billion ($10.2 billion), is among consumer- goods companies looking to emerging markets including Asia and Africa to drive sales growth as economic stagnation stunts growth in the U.S. and Europe. Anadolu Efes is the Middle East’s largest brewer, getting 31 percent of sales from Turkey, and also has operations in Russia, Kazakhstan, Moldova and Georgia.

“This is positive” for SABMiller, said Trevor Stirling, an analyst at Sanford C. Bernstein in London. “It increases relative exposure in emerging markets and addresses some of the concerns about dilution from the Foster’s deal.”

Buying Foster’s will reduce the percentage of earnings from markets outside the U.S. and western Europe to about 70 percent from more than 80 percent, Deutsche Bank AG has estimated.

SABMiller, the world’s second-largest brewer by volume, rose 1 percent to 2,283 pence at the close in London trading. Shares of Anadolu Efes gained 6.8 percent to 22 Turkish liras ($11.80) in Istanbul.

First-Half Sales

Also today, SABMiller reported first-half sales that missed analysts’ estimates, saying “some particularly poor weather” in Europe and China held back growth. So-called organic volume rose 3 percent, the London-based company said, below the 3.8 percent median estimate of 11 analysts. Organic volume excludes the effect of acquisitions and disposals.

The maker of Grolsch and Peroni, which said that financial performance for the half year was in line with its estimates, brought forward the sales announcement, which was due tomorrow.

The enlarged Anadolu Efes will rank behind Carlsberg A/S’s Baltika in the Russian beer market. Anadolu Efes will have a market share of 17.9 percent, compared with 38.4 percent for Carlsberg, according to JPMorgan Chase & Co. analysts.

SABMiller’s Russian and Ukrainian units produce local brands including Zolotaya Bochka, Tri Bogatyrya and Moya Kaluga, alongside international beers such as Miller Genuine Draft.

Russian Growth

The Russian beer market, the world’s third-largest by volume after China and the U.S., may decline at a “low single- digit” rate this year before resuming growth of 3 percent to 5 percent after 2013, Carlsberg said in August. Russia’s government raised taxes on the drink by 200 percent at the start of 2010, which is still affecting consumers, Carlsberg CEO Joergen Buhl Rasmussen said at the time. The Russian economy is expected to grow at a rate 4.5 percent this year and next, more than double the pace of the U.S., according to Bloomberg data.

Unilever, the world’s second-biggest consumer-goods company, agreed to buy Russian skincare maker OAO Concern Kalina last week in a deal valuing the company at about $694 million.

Anadolu Efes already controls 89 percent of Turkey’s beer market and 69 percent of the country’s carbonated soft drinks market. SABMiller and Anadolu Efes will also be able to distribute each others’ brands in other areas.

Deal Multiple

The agreement implies an exit multiple of about 12.7 times estimated earnings before interest, tax, depreciation and amortization, according to Dirk Van Vlaanderen, an analyst at Jefferies in London, who described it as a “fair” price. The median multiple paid in the brewing industry in the past 10 years is 9.4 times Ebitda, data compiled by Bloomberg shows.

The transaction will lead to cost benefits of at least $120 million a year and add to both brewers’ earnings per share in the first full year following completion, the companies said.

“Anadolu Efes’s leading position in beer and soft drinks in the Turkish market and an alliance for further growth and acquisitions in the CIS and Middle East are highly attractive,” SABMiller Chief Executive Officer Graham Mackay said in the statement. “The prospects for these markets are excellent.”

Turkish beer consumption is set to increase to 11.9 liters a person next year from an estimated 11.7 liters this year, according to Mintel International. That’s lower than the U.S. and U.K., where drinkers will drink between 73 and 74 liters on average this year. The world’s highest per-capita beer consumption is 152.5 liters in the Czech Republic, Mintel said.

Mey Icki

Diageo Plc, the world’s biggest distiller, agreed to buy Turkey’s Mey Alkollu Ickiler Sanayi & Ticaret AS in February, adding spirits including Yeni Raki. The maker of Johnnie Walker whisky will start to sell its Guinness stout beer in Turkey via Turk Tuborg Malt Sanayi AS, Turk Tuborg said Sept. 7.

Earlier this month, SABMiller’s shares advanced the most in almost three years after Brazilian news website IG reported that the beermaker was in talks to be bought by larger competitor Anheuser-Busch InBev NV. Today’s deal “probably makes a bid by AB InBev less likely,” Bernstein’s Stirling said.

SABMiller retained Nomura Holdings Inc. as sole financial adviser, Hogan Lovells International LLP and Herguner, Bilgen, Ozeke as legal advisers, and JPMorgan Cazenove and Morgan Stanley as joint brokers. Rothschild is acting as financial adviser for Anadolu Efes, with DLA Piper UK LLP and YukselKarkinKucuk Attorney Partnership as legal advisers.

--Editors: Paul Jarvis, Robert Valpuesta.

To contact the reporter on this story: Clementine Fletcher in London

To contact the editor responsible for this story: Celeste Perri at

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