SAB in £200m placing to fund Honduras buy

Nigel Cope,City Editor
Friday 30 November 2001 01:00

South African Breweries announced a $537m (£378m) acquisition in central America yesterday and dismissed speculation regarding possible bid interest from Interbrew, the maker of Stella Artois.

The London-based brewer of Castle lager and Pilsner Urquell is buying 97 per cent of Cerveceria Hondurena, the only brewer in Honduras. It is also forming a joint venture with the dominant brewer in neighbouring El Salvador.

The move, which will be funded by a share placing to raise £200m, will make SAB the first international brewer to enter Central America, where beer consumption per capita is lower than in more mature markets but has strong growth potential.

The deal came as SAB's chief executive, Graham Mackay, said he was "truly astonished" by the leaking of plans for a possible bid for SAB from Belgium's Interbrew.

It is understood that Hugo Powell, Interbrew's chief executive, has written to Mr Mackay to apologise for the embarrassment caused by leaked documents prepared by Goldman Sachs and Lazards. Interbrew was forced to admit on Wednesday it had carried out a preliminary analysis of SAB but said no approach had been made.

Mr Mackay added: "I don't think we're vulnerable. I think our strategy is working and we have good growth prospects. Do we need to be rescued from our 'predicament'? I don't think so."

He admitted that all the major brewers were looking at each other as the largest companies were facing mature markets which are now ex-growth. "We don't think our progress relies on that but if there are value-adding propositions we would look at them."

Mr Mackay did not rule out interest in Carling, Britain's biggest-selling lager, which Interbrew has been forced to put up for sale following its purchase of Bass Brewers.

The comments came as SAB reported a 3 per cent fall in first-half profits to $302m, partly due to a continued depreciation of the South African rand. Beer sales in South Africa, where SAB has a 98 per cent market share, were down by 1 per cent, though Mr Mackay said conditions were improving.

The shares, which soared 8 per cent on the Interbrew leak on Wednesday, fell 6p to 472p.

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