SABMiller hops scotch

“Before jumping to any conclusions on how the deal would work from a competitions point of view (there would have to be asset disposals in North America) and equally from a cash and scrip point of view, i.e. would there be an inward listing of the combined group (would it happen??), tradable here in Jozi, let us see something firm on the table. The Brazilian crowd, 3G, are the controlling shareholders having pieced together this group going to pay 30 times earnings for a company that operates in many emerging markets?”


To market to market to buy a fat pig. What’s cooking good looking? Or, more to the point, what’s brewing buddy? It turns out that the same old story has reared again, the AB InBev take out of the second biggest brewer on the planet, SABMiller. A business with local roots, it is however not South African owned anymore. Altria, the US listed mostly tobacco company, owns nearly 27 percent of SABMiller and a Colombian family, the Santo Domingo family, owns nearly 14 percent, courtesy of a deal back in 2005. Add those two up and you get to 41 percent already. The Pic owns 3.43 percent, Blackrock owns 3.11 percent. In fact, you will recall a message titled The JSE is global, in which I said (and there is some repetition, excuse me):

I got a reply from a friendly fellow at SABMiller, who informed me that the SABMiller London versus Johannesburg shareholder split was 83.9 percent London, 16.1 percent Johannesburg. How is that possible? SABMiller moved their primary listing to London in March 1999. All the deals along the way, Colombia’s Bavaria (the Santo Domingo family became big shareholders then, 14 percent) in 2005. In 2002, earlier in the cycle of beer mega-deals, Altria (Philip Morris back then) became the biggest shareholder with the amalgamation of their Miller with SAB, hey presto, SABMiller. Altria owns 27 percent.

So there you go! SABMiller is owned by folks through their London register. The stock registered the biggest one day move since their March 1999 listing in London yesterday, ending the session up 19.89 percent at 36.14 Pounds, or a market cap of 58.78 billion Pounds. Which is a staggering amount of Rand, 1.239 trillion Rand. If only 16.1 percent of that is actually held on the South African register, that amounts to around 200 billion Rand here locally. Those folks enjoyed a lift of 18.35 percent yesterday, closing at 739 Rand on the day, 33 Rand and some cents off the very best levels.

AB InBev have 30 days to make an offer, the semantics of British law escape me, that is however the time frame. Some people suggest as much as 100 billion Dollars. By mega deals this would not only be the most sizeable in the beer making industry (one buys two), it is amongst a small grouping of deals that size, you can count them on a single hand. It would also (almost obviously) top the ranking tables as far as deals done this year, with only Time Warner Cable and Charter Communications merger, valuing Time Warner at 78.7 billion Dollars coming close. That was back in March, before everyone was anxious daily about what the Fed is going to do and what the short term prospects are for the Chinese economy.

Before jumping to any conclusions on how the deal would work from a competitions point of view (there would have to be asset disposals in North America) and equally from a cash and scrip point of view, i.e. would there be an inward listing of the combined group (would it happen??), tradable here in Jozi, let us see something firm on the table. The Brazilian crowd, 3G, are the controlling shareholders having pieced together this group going to pay 30 times earnings for a company that operates in many emerging markets? Those said markets have been sucking wind we are told, too much leverage built up in the go-go days, struggling fiscally. Look at Brazil, we spoke about that just yesterday. A deal is not a deal until the money is in the till, or in this case an offer on the table, I do disagree with the board telling you to ignore. How can you ignore if the share price has increased in value by one-fifth in a day.

The massive move higher in what is now the largest company on the exchange by market capitalisation saw to it that the overall market moved ahead by an astonishing 3.11 percent for the day, or over 1500 points. That is mind blowing, it is not often at all that you get to witness a day like that. That was on top of an excellent day for Richemont after their well received 5 month sales report, by the end of day the stock had added nearly 6 and two-thirds of a percent.

A stronger showing on the day for MTN (which has lagged horribly) on the news that there is likely to be no more Nigerian Naira devaluation was met with handclaps and a share price at nearly 180 Rand. The stock first breached that level in July of 2013, topping out at 260 Rand a share in September last year, just before the oil price and all emerging market currencies were caned. MTN has almost traded as a proxy for the oil price. Over the last 12 months the stock is down nearly 30 percent. Yech. The next news from the group are the quarterly trading subscriber numbers in late October.

Over the seas and far away (from here), stocks in New York, New York rallied strongly, the strongest levels in around four weeks. And all of this ahead of the Fed announcement, sometime between 7 and 8 tonight local time methinks. Setup alerts on your smartphone if you want to know, although I find those hardly very high brow. What I mean is that you must try and write a single sentence to explain why stocks go up and down. You can use the same information to explain the reason. Looking for a reason why markets go up and down, day in and day out must be an extremely tedious job. That is why we don’t place too much emphasis on it at all.


Linkfest, lap it up

Yale is receiving interest on a bond dating back to 1648, the bond is written on goatskin – Yale to Be Paid Interest on Dutch Water Authority Bond From 1648.

Crowd funding is changing the ways that we can raise money for our ideas. One of the best know companies that have a roots in crowdfunding is Oculus – Art Investment Platform Draws Crowdfunders Into the Scene. This is a great way to help with the cashflow of artists and get more people interested in art.

This is a collision of the old world(newspapers) and the new (internet), both companies also happen to be owned by Bezos – Amazon Prime members are getting six months of The Washington Post for free.

The iPhone is a money making machine, if you have a spare 11 minutes give this video a watch – How Does Apple Make so Much Money?


Home again, home again, jiggety-jog. There is only one subject on the agenda today and it is not what you think about the selection for the team on Saturday. Remember to remind your opinionated friends whilst turning some meat on Saturday that fourth team fullback at school does not qualify as chief selector and coach. That might be awkward afterwards, forget it, discuss the team with your ideal one, be sure to throw in some ridiculous suggestions that could work. Today it is all about the FOMC meeting later. That is apparently going to rock our world. Methinks that they are going to do something different, like move the band marginally higher, little bit by little bit until they get higher, and then they can hit it with 25 basis point hikes. Whether that happens today, in 45 days time or in 90 days time is irrelevant in your investor time frame.


Sent to you by Sasha and Michael on behalf of team Vestact.

Email us

Follow Sasha, Byron and Michael on Twitter

087 985 0939

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s