SABMiller CEO Says Beer Deals Slowing Amid High Multiples

Global beer acquisitions by big brewers have slowed because the prices paid have skyrocketed, SABMiller (SAB) Plc Chief Executive Officer Graham Mackay said.

“The last few have been at unthinkable levels,” Mackay said at a conference in San Antonio hosted by Beer Business Daily. “It’s hard to see how most of the potential deals can be worth it.”

He didn’t specify what potential deals he was referring to.

Global brewers have used acquisitions to expand into new markets in recent years. Including net debt, Anheuser-Busch InBev NV (ABI) last year agreed to buy the remainder of Mexico’s Grupo Modelo SAB for $17.1 billion while Heineken NV (HEIA) last year bought Fraser & Neave Ltd.’s stake in their Asia Pacific Breweries Ltd. (APB) joint venture for about $4.36 billion, according to data compiled by Bloomberg.

Those deals followed London-based SABMiller’s 2011 purchase Foster’s Group Ltd. in Australia for about $13 billion, including net debt.

AB InBev is valuing Modelo’s enterprise value at 13 times earnings before interest, taxes, depreciation and amortization, while Heineken is paying 17 times F&N’s Ebitda, according to data compiled by Bloomberg.

Mackay also said he believes Anheuser-Busch’s purchase of the rest of Modelo will be approved by U.S. regulators. Any concessions won’t derail the deal, he also said.

Mackay declined to say whether he expected a deal between Anheuser-Busch InBev and SABMiller.

“Our job is to make our business as expensive as possible to buy,” he said.

Share Gain

SABMiller shares rose 27 percent in the 12 months through yesterday, boosting the company’s market value to 49.3 billion pounds ($77.7 billion).

Last week, the world’s second-biggest brewer reported organic revenue that beat estimates for the third quarter as consumers opted for pricier beers.

Revenue at the maker of Grolsch and Peroni rose 8 percent on an organic basis, which excludes the effects of acquisitions and disposals, the London-based company said in a statement. That was ahead of the 6.5 percent median estimate of 11 analysts surveyed by Bloomberg News.

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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