SABMiller CEO Clark Sees More Brewing M&A After Recent Slowdown

SABMiller Plc (SAB), the world’s second-biggest brewer, expects further consolidation among beer makers after a slowdown in industry takeover activity this year, according to Chief Executive Officer Alan Clark.

“I’m not sure there is a blockage” in the pipeline of acquisitions following “quite a spate” of purchases in the last few years, Clark said at a conference in London today.

SABMiller, which bought Melbourne-based Foster’s Group Ltd. in 2011 for A$10.5 billion ($9.8 billion), will continue to look for targets, though mergers and acquisitions are “less important on our agenda” than organic growth, Clark said.

Thirty brewing takeovers have been announced globally this year for a total of $6.4 billion, according to data compiled by Bloomberg. That compares with the 68 that were announced in 2012 in deals worth $48.1 billion, the data shows.

SABMiller may look at assets in Asia, including China, where the company’s local joint venture with China Resources Enterprise Ltd. is buying Kingway Brewery Holdings Ltd.’s beer-making assets. The Kingway purchase will take their combined Chinese market share to about 24 percent, Clark said.

London-based SABMiller is among brewers who are expanding through acquisitions to tap booming economic growth in markets outside the U.S. and Europe. Last year, bigger competitor Anheuser-Busch InBev NV splashed out $20 billion to secure full control of Mexico’s Grupo Modelo SAB, while Heineken NV bought out its joint venture partner to consolidate ownership of Asia Pacific Breweries Ltd. for S$5.6 billion ($4.4 billion).

Individual Brands

SABMiller may consider buying individual brands as well as companies, Clark said, adding that purchases shouldn’t weigh on earnings per share in the first two to three years.

The multiple that buyers are paying for brewery assets is increasing, and has been for a while, said Clark, who was named CEO in April after Graham Mackay underwent treatment for a brain tumor.

SABMiller still expects Ebita margin, a measure of profitability, to increase 20 to 50 basis points this year, excluding acquisitions and currency fluctuations, Clark said.

He declined to comment on the company’s recent trading. First-quarter organic lager volume slid 1 percent from a year earlier, SABMiller said in July, as cold and rainy weather hit business across northern Europe and China.

To contact the reporter on this story: Clementine Fletcher in London at cfletcher5@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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