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from Breakingviews:

Diageo throws money at Indian empire-building

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By Robert Cole and Una Galani

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Diageo is engaging in some expensive empire-building in India. An under-powered tender offer meant an earlier attempt to take control of Vijay Mallya’s United Spirits was only partially successful. Now the world’s biggest spirits maker has more than doubled the price it is willing to pay, offering $1.9 billion to raise its stake to 54.8 percent from 28.8 percent.

At 3,030 rupees a share, the new offer equates to 38 times historic EBITDA. That’s eye-popping even for a consolidated industry desperately chasing the last drops of emerging markets growth: Heineken paid 17 times trailing EBITDA for Asia Pacific Breweries in 2012, for example. At least it makes this offer more likely to succeed.

A 20 percent premium to United Spirits’ share price over the last 60 days looks more reasonable – but the stock has already been lifted by bid hopes, and by optimism that an election victory for Narendra Modi will make India more business-friendly. Nor can Diageo justify the price through synergies, since there are few overlaps with its own existing operations in India.

from Breakingviews:

AB InBev deserves premium-strength rating

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By Robert Cole

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

AB InBev seems to pump as much cash as beer out of its business. It is the world’s biggest brewer, responsible for the Budweiser, Stella Artois and Corona brands, and even with a 2 percent annual decline in volume it poured 426 million hectolitres of grog in 2013. That’s enough to fill 17,000 Olympic-sized swimming pools.

from Breakingviews:

Suntory lives up to motto with $16 bln Beam bid

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

For a Japanese corporation, Suntory Holdings has an especially aggressive corporate slogan: “Yatte Minahare,” which roughly translates as “Go For It.” That sums up Suntory’s willingness to pay $16 billion, or a hefty 20 times EBITDA, for the U.S. distiller of Jim Beam, Maker’s Mark and other tipples. That number won’t be lost in translation for Diageo, Pernod Ricard or others who might also covet Beam.

from Breakingviews:

AB InBev moves fast to keep Mexico prize

By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Anheuser-Busch InBev is moving fast to save its Mexican ambitions. The world’s biggest brewer has rejigged its $20 billion buyout of Grupo Modelo two weeks after regulators objected, worrying that U.S. drinkers would suffer. In response, AB InBev is relinquishing any claim to Modelo’s beers stateside. That could prevent a long legal fight, while keeping the deal’s rationale largely intact.

from Breakingviews:

AB InBev setback may hasten last round of beer M&A

By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A deal setback for Anheuser-Busch InBev may ironically hasten a last round of consolidation in beer. The U.S. Department of Justice opposes AB InBev’s $20 billion plan to buy out the other half of Grupo Modelo, the Mexican group behind Corona. The world’s largest brewer may yet find a workable compromise. But if not, an obvious plan B exists: the long-rumoured takeout of SABMiller.

from Breakingviews:

Diageo’s M&A machine misfires with Jose Cuervo

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By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The sun is setting on Diageo’s ambitions to be a big shot in tequila. A generous reading is that Diageo remains disciplined about deals. But letting Jose Cuervo go is a meaningful setback in the group’s largest market.

from Breakingviews:

Diageo’s India splash won’t get Kingfisher flying

By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Diageo’s $2.1 billion acquisition of United Spirits has helped India’s largest liquor company and its chairman Vijay Mallya. But hopes that Kingfisher Airlines will fly again simply because the grounded carrier’s flamboyant founder has raised some cash look overoptimistic.

from Breakingviews:

Starbucks cross-border tax tactics fail taste test

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By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Never underestimate the power of a government which changes its mind. The managers of Starbucks might want to contemplate that adage. The U.S.-based coffee chain reported last year a loss of 33 million pounds on revenue of 398 million pounds at its UK subsidiary for tax purposes, according to a Reuters report. The company does not disclose accounting results by country, but operating profit margin of the international business stood at 13 percent.

from Breakingviews:

Asian conglomerate owners owe Heineken a toast

By Wayne Arnold

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Fraser and Neave’s shareholders may wind up raising a glass to Heineken. The Dutch brewer’s $6 billion bid for their Tiger beer venture, Asia Pacific Breweries, should catalyze the independent directors of the Singapore drinks and property group to consider a full-blown breakup. Even after F&N’s recent stock run-up, its pieces are worth some 20 pct more than the whole.

from Breakingviews:

Heineken tries to take the Asian Tiger by the toe

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Heineken is trying to catch the Asian tiger by the toe. The Dutch brewer launched a $6 billion bid to take control of Asia Pacific Breweries, its longtime Asian partner, pitting it against a thirsty Thai beer mogul and Japan’s Kirin. It’s a bold move for conservative Heineken that will put Singapore’s corporate governance bona fides to the test.

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