SABMiller and Grolsch Drink to Pounds 582m Deal

Article excerpt

By Nikhil Kumar

SABMiller, the world's second largest brewer, 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 per share, 84.3 per cent above Grolsch's average closing price over the past month.

SABMiller, the brewer behind Miller Genuine Draft, Miller Lite and Peroni, said that the management of Grolsch supported the offer, which values the Dutch company at 816m (582m). As with earlier deals, including its acquisition of Italy's Peroni and Germany's Beck's, SABMiller is paying a premium, offering almost 15 times the reported 2006 earnings before interest, tax, depreciation and amortisation.

The announcement, which comes just after the UK-based Scottish and Newcastle rejected a bid by Denmark's Carlsberg and Heineken, another Dutch brewer, is further evidence of the trend toward consolidation in the global brewing industry.

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. …