Pulling power

SABMiller's growth focus raises Budweiser stakes

Anheuser-Busch InBev's potential $100 billion takeover of SABMiller is brewing up a storm. It has been three weeks since news broke that the Budweiser beer company was mulling a takeover. Until SABMiller's second-quarter trading statement of October 6, there was nothing else for shareholders to chew on. But the ostensibly ordinary sales update raises the stakes.

For one thing, the timing of the trading update will have taken the putative bidder - and everyone else - by surprise. SAB had been due to issue the trading update next week, just as a one-month "put-up-or-shut-up" pre-takeover grace period expires. It's reasonable for SAB to untangle normal quarterly reporting from the M&A stuff, but the timing may wrong-foot Anheuser's negotiating team.

Between the lines of the trading statement, SAB also sent an unambiguous message to the Budweiser bidders about growth. Alan Clark, chief executive of the South African-born brewer, used the G-word six times in just three short sentences of trading statement preamble. Dog whistle it may be, but Clark is telegraphing a deep-rooted SAB intention to take the hardest possible line in negotiations without becoming actively hostile.

There is a risk SAB management overplays its hand. True, second-quarter figures published by SAB on October 6 show good underlying growth in Latin America and Africa. In the latter, SAB's net producer revenue - sales before excise duties - rose 11 per cent. Less impressive sales growth came in Asia Pacific and Europe, while in North America - where SAB has a joint venture with Molson Coors - revenue actually shrank. The overall rise in underlying revenue was six per cent. Lob in the impact of adverse currency movements, meanwhile, and the groupwide top-line revenue number dropped a chunky nine per cent.

SAB shareholders may see more logic in a tie-up with Anheuser and be dismayed to see a half decent offer slip. Still, seven days ahead of Anheuser's deadline to launch a formal offer, SAB seems to be handing Budweiser a hard-nosed request: pay up for our carefully curated growth in Africa and elsewhere - or shut up and go away.