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South America's Second-largest Brewer

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Enjoy the article.

I will tell you something, I do go to hispanic business web sites, and NONE of them post like this on there boards.


I thankgod that I can post like this in DCpages.com




Tuesday, July 19, 2005 · Last updated 9:32 a.m. PT


SAB Miller buys Bavaria controlling stake




LONDON -- SABMiller PLC said Tuesday it is acquiring a controlling stake in Bavaria SA, South America's second-largest brewer, in a deal worth about $5.6 billion.


The acquisition gives the London-based maker of Miller beer a major footprint in Latin America, a key growth area and an important market for it to compete with InBev SA, the world's biggest brewer by volume.


"We are excited by the enhanced prospects for growth, in a strategically important market, which the combination with Bavaria brings," said SABMiller Chief Executive Graham Mackay.


SABMiller said it was buying a 72 percent stake in Bavaria from Santo Domingo Group for $3.5 billion. Santo Domingo Group is taking a 15.1 percent stake in SABMiller, the world's third-biggest brewer after Anheuser-Busch Cos. Inc.


Following completion of the transaction, SABMiller plans a cash offer to minority shareholders in some subsidiaries. The company estimated those transactions would cost $2.1 billion.



Brewers seeing sluggish sales in Western Europe and the U.S. are expanding operations in markets such as China, the new members of the European Union and Latin America.


Bavaria controls 99 percent of the beer market in Colombia and Peru, 93 percent in Ecuador and 79 percent in Panama. Key brands include Aguila, Cristal, Pilsener and Atlas.


Shares in SABMiller surged 10.6 percent to close at 980 pence ($17.12) in London trading.


"Clearly, Latin America is a growth market as far as beer volumes are concerned, and this deal completes SABMiller's geographical representation of global beer markets," said Barclays analyst David Liston.


SABMiller expects to save $120 million in annual costs from the deal within five years, while tapping the strong growth in beer consumption in the region.


Volumes of beer sold in the Andean region of South America are expected to grow annually at a compound rate of 4 percent over the next five years - in contrast to just 2 percent across the global beer industry as a whole.


InBev, which has as its flagship brands Brazil's Brahma, Belgium's Stella Artois and Germany's Beck's, this week reported a 5.4 percent growth in volume sales in the first half of 2005, fueled in part by big increases in beer consumption in Latin America.


Bavaria sells 30 million hectoliters in Latin America, compared to Inbev's 70 million hectoliters.


In 2004, Bavaria had a pretax profit of $430 million. SABMiller said in May that its profit for the year ended March 31 increased by 77 percent to $1.14 billion, with group revenue up 13.5 percent to $12.9 billion.


The deal is subject to approval by SABMiller shareholders.



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