CZECH REPUBLIC: Czech Billionaires To Buy Top Brewery Plzensky Prazdroj

Two Czech billionaires have teamed up in an effort to buy the country’s top brewery, Plzeňský Prazdroj, according to Hospodářské noviny. The country’s wealthiest man, Petr Kellner, and Pavel Tykač, fifth on the rich list, want to get their hands on the Pilsner Urquell-producer and other regional breweries being sold off by SABMiller.

Earlier this year the European Commission granted the world’s two biggest beer companies, Anheuser-Busch InBev and SABMiller, approval to merge.

There was one major proviso. Most of SABMiller’s holdings in Europe have to be sold off so as to ensure competition in those markets remains healthy.

This also concerns Plzeňský Prazdroj, the Czech Republic’s leading maker and exporter of beer and the producer of its best-known brand, Pilsner Urquell.

Petr Kellner is the owner of the PPF investment group and the Czech Republic’s richest person. The country’s fifth wealthiest inhabitant is Pavel Tykač, who owns power company Czech Coal.

Hospodářské noviny reported on Monday that Mr. Kellner had approached Mr. Tykač with a view to teaming up to make a bid of CZK 175 billion to SABMiller for Plzeňský Prazdroj and four other central European breweries.

The companies concerned are Slovakia’s Topvar, Dreher from Hungary, Romania’s Ursus and Kompania Piwowarska from Poland.

Mr. Kellner and his PPF would put up most of the money, with Mr. Tykač obtaining a minority stake.

Hospodářské noviny quoted an analyst as saying PPF was now increasingly focusing its attentions on the Czech market. This is borne out by its acquisitions of telecoms operator O2 and Sazka, the top betting company.

A number of investment groups and other beer makers are also interested in Plzeňský Prazdroj and the four breweries. So is MOL, an oil and gas concern from Hungary.

Reports say that there were at least six indicative offers. It said that three of the other bids were also from consortiums.

Hospodářské noviny said on Monday that the list of finalists would be released in the coming days by the consultancy firm overseeing the sell-off for the European Commission.

The expected price should make the deal one of the biggest ever seen in the history of the Czech Republic and Central Europe. It has not yet been decided whether the breweries will be sold off in one job-lot or split into two packages.

Hospodářské noviny said its sources suggested that if the Czech billionaire duo were successful, they would probably sell off parts of the group of breweries in the medium term.

Billionaire Beer Barons Key To SABMiller Deal

Once again, Colombia’s richest family is standing between South America’s biggest billionaire and his plans for expanding his brewing empire.

With a 14% stake in SABMiller [JSE:SAB] and two seats on the board, the Santo Domingos have the power to thwart Brazil’s Jorge Paulo Lemann, a co-founder of the buyout firm 3G Capital and a top shareholder in Anheuser-Busch (AB) InBev.

The maker of Budweiser made an offer of about R1.348trn for SABMiller with a two-tier proposal that would pay £37.49 a share in cash and stock for the two largest shareholders’ stakes. Altria Group, which has the most, urged the company to consider the proposal, but AB InBev said the Santo Domingos, the next-largest holder, didn’t give their support.

If the companies could ever reach an agreement, the family, whose interests are managed by Alejandro Santo Domingo, 38, and Lemann, 76, would “form the most important alliance in the merger,” said Andres Jimenez, a Colombian investor and former head of international sales at the Medellin-based brokerage Serfinco.

Both AB Inbev and SABMiller get about a third of their revenue from Latin America. In Brazil, the region’s biggest beer market, AB InBev’s Ambev unit has a two-thirds market share.

The South American beer barons have been here before.

In the mid-90s, Lemann, who owned the regional brewing powerhouse Brahma, made an offer to buy the Santo Domingo’s brewery in Colombia, called Bavaria. Violy McCausland-Seve, a New York investment banker who was born in Barranquilla, where the family has roots, said she advised them to say no.

Consolidation strategy

She said the price - which she wouldn’t disclose - didn’t value the quality of the management and uniqueness of a family-owned company with no succession issues.

“We worked on it for like a year and finally concluded it wasn’t a good transaction,” she said. “We thought the offer wasn’t rich enough.”

Lemann made another try in 2000. Alejandro Santo Domingo was working at Violy, Byorum & Partners, a boutique mergers and acquisitions firm McCausland-Seve founded, when Lemann made the second overture at a meeting in Paris, and the answer was the same. The family decided to continue with their consolidation strategy, buying up breweries in Panama, Peru and Portugal. In 2005, the clan sold its stake in Bavaria to SABMiller.

By then, Lemann had folded Brahma into Belgium’s Interbrew. He used his position as the largest shareholder with three seats on the board to orchestrate the 2008 merger with Anheuser Busch that created industry giant AB InBev. The company’s chief executive officer, Carlos Brito, is a Lemann protégé; the billionaire paid for his Stanford MBA. Lemann also put Joao de Castro Neves, AB InBev’s president of North America, through business school at the University of Illinois. Both the executives are Brazilian.

The Santo Domingos also have an AB InBev connection. Chairperon Olivier Goudet was backed by the family’s money when he merged the world’s second and third-largest coffee retailers this year as head of JAB Holding.

Though they have never made a beer deal, there doesn’t appear to be bad blood. Lemann and Alejandro Santo Domingo - both Harvard University grads who became rich by consolidating local breweries - run in similar circles in the worlds of investing and philanthropy. They’re on the same advisory boards at Harvard, Columbia University and the Latin American Conservation Council.

Lemann controls South America’s largest fortune, which is valued at $24.9bn (R335.84bn), according to the Bloomberg Billionaires Index. In second place: the Santo Domingos, with $14.8bn (R199.61bn). Their fortune has swelled by more than $2bn (R26.97bn) in recent months as SABMiller’s stock has risen on AB InBev’s interest in a deal.

AB InBev And SABMiller Agree New Takeover Proposal

British brewer SABMiller announced on Tuesday that it had agreed a takeover by Anheuser Busch InBev, the world's biggest beer producer, in a deal worth about £71 billion ($109 billion).

Belgian-Brazilian group AB InBev, the maker of Budweiser and Stella Artois lagers, struck a deal with the maker of Foster's and Grolsch at the fifth time of asking.

“The boards of AB InBev and SABMiller announce that they have reached agreement in principle on the key terms of a possible recommended offer” priced at an improved £44 per SABMiller share, the British group said in a statement to the London Stock Exchange.

The deal is higher than a fourth bid tabled on Monday worth about £43.50 a share.

At £44 a share, the all-cash offer is a premium of about 50 percent to SABMiller's closing share price on September 14, or final business day prior to renewed speculation of an approach by AB InBev.

SABMiller, the world's second largest brewer, claimed the previous bids undervalued the company, upping the pressure ahead of Wednesday's regulatory deadline by which time its rival would have had to make an official offer or walk away for at least six months

SABMiller And AB InBev Beer In Merger Negotiations

The prospect of a tie-up between the world's two largest brewers is looming after Anheuser-Busch InBev said it had made a takeover move for SABMiller.

The combined value of the two firms is likely to be at least $230bn (£150bn) based on Tuesday's share price.

AB InBev's brands include Budweiser, Stella Artois and Corona, while SABMiller owns Peroni and Grolsch.

If the deal is successful, the merged company would produce one third of the world's beer.

AB InBev said it had approached SABMiller's board about a "combination of the two companies".

However, it added that there was no certainty the approach would lead to an offer or an agreement.

Earlier, SABMiller said it had been informed that AB InBev was planning to make a bid, but that it had no details as yet.

"No proposal has yet been received and the board of SABMiller has no further details about the terms of any such proposal," the firm said.

Shares in SABMiller jumped more than 20% on the news, while AB InBev's shares were 11% higher.

"Let's get this straight, this is a takeover by AB InBev of SABMiller. It's not a merger," said Larry Nelson, editor of the industry trade magazine, Brewer's Guardian.

Given the size of the deal both parties would be likely to have to sell off parts of their operations to get it past the regulators, and that may mean sacrificing some of their US and Chinese businesses .

"In the US SABMiller has a joint venture with Molson Coors which gives it a 25% share of the market and makes it a clear number two," Mr Nelson added.

"But combining with the number one, AB INBev, would give them 75% of the market, which is clearly untenable. But AB InBev would not have gone into this without having some plan of what they want to divest."

The merged company would be likely to move aggressively into faster growing markets.

AB InBev has an eye on the South African markets where SAB Miller dominates in 15 countries, and has a presence in a further 21.

A merger would also strengthen its grip on South America and Mexico which are by far its most profitable markets.

This deal has long been anticipated but analysts believe AB InBev was held back from making an offer because of high levels of debt built up through a string of other purchases.

SABMiller has also been trying to do deals. Last year it made an unsuccessful offer for its smaller rival Heineken in a move that was widely seen as an attempt to ward off a bid from AB InBev.