Breakingviews

Drinks can merger may yet get flattened

February 19, 2015

U.S. drinks can maker Ball agreed to pay 4.3 bln stg in cash for British rival Rexam. Ball also pledged to pay a chunky 302 mln stg fee if it is blocked. Rexam’s share price suggests the merger may still fall foul of trustbusters.

SABMiller’s Coca-Cola push is Africa buy signal

November 27, 2014

The UK brewer and the U.S. drinks giant are merging assets in southern and eastern Africa to create a soft-drinks bottler with $3 bln of sales. SAB gets control and gains market access. The move points to the continent’s strategic potential, and similar consolidation could follow.

SABMiller has fight to justify heady share price

November 13, 2014

The beer is getting weaker at the world’s No. 2 brewer. Volumes fell 1 pct in the first half. Australia, where SAB did its last big deal, is proving especially tricky. It is faring better in soft drinks. But the stock’s high rating has scant support without M&A upside.

Starbucks avoids froth in $913 mln Japan buyout

September 24, 2014

The U.S. coffee chain is buying the 60.5 pct of its Japanese business it doesn't already own at a discount to the unit’s market value. Expiring licenses give Starbucks a chance to take control of a large market on the cheap - as long as minority shareholders don’t resist.

SAB/Heineken could leap antitrust hurdles

September 15, 2014

Heineken calls SABMiller’s bid approach “non-actionable.” Competition problems do exist in Europe, India, Africa and elsewhere. But these could be fixed and a $130 bln tie-up would create an emerging markets titan. The rebuff suggests family control is the real sticking point.

Coke investment reveals half-empty idea bottle

August 15, 2014

The beverage behemoth is paying $2.2 bln for 17 pct of the trendy energy-drink maker Monster. It goes to show that even a $176 bln global powerhouse with significant distribution and marketing advantages can struggle to stay ahead. At least Coke got the deal formula right.

U.S. drought could spark economic water warfare

June 26, 2014

Scarce rains have left California and the U.S. Southwest dry just as industries from beverages to semiconductors grow concerned about the availability of H20. That presents a flood of opportunity for water tech firms and Great Lakes states like Indiana, Michigan and Wisconsin.

Diageo throws money at Indian empire-building

April 15, 2014

The UK distiller is again trying to tighten its grip on India’s United Spirits. It’s offering $1.9 bln to nearly double its stake to 54.8 pct. A sky-high multiple of 38 times EBITDA gives this offer better odds than the last. And there’s industrial logic to offset the huge price.

AB InBev deserves premium-strength rating

February 26, 2014

The Budweiser brewer seems to pump as much cash as beer out of the business. Latest results suggest its key markets may be improving too. Its well-oiled M&A machinery may flatter the underlying long-term reality. But it is hard to see why investors’ taste for the stock will wane.

Suntory lives up to motto with $16 bln Beam bid

January 13, 2014

The Japanese booze group’s slogan is “Yatte Minahare” or “Go For It.” In finance argot it means Suntory’s willing to pay about 20 times EBITDA for the distiller of Jim Beam, Maker’s Mark and other tipples. It’s a big price which won’t be lost in translation for Diageo or Pernod.