- AB InBev crafts offer with SABMiller top shareholders in mind
- Lemann and Santo Domingos have history of failed courtships
Once again, Colombia’s richest family is standing between South America’s biggest billionaire and his plans for expanding his brewing empire.
With a 14 percent stake in SABMiller Plc and two seats on the board, the Santo Domingos have the power to thwart Brazil’s Jorge Paulo Lemann, a co-founder of the buyout firm 3G Capital and a top shareholder in Anheuser-Busch InBev. The maker of Budweiser made an offer of about $100 billion for SABMiller with a two-tier proposal that would pay 37.49 pounds a share in cash and stock for the two largest shareholders’ stakes. Altria Group Inc., which has the most, urged the company to consider the proposal, but AB InBev said the Santo Domingos, the next-largest holder, didn’t give their support.
If the companies could ever reach an agreement, the family, whose interests are managed by Alejandro Santo Domingo, 38, and Lemann, 76, would “form the most important alliance in the merger,” said Andres Jimenez, a Colombian investor and former head of international sales at Medellin-based brokerage Serfinco. Both AB InBev and SABMiller get about a third of their revenue from Latin America. In Brazil, where AB InBev’s Ambev unit has a two-thirds market share, SABmiller reached a deal last year to distribute brands of Grupo Petropolis, the brewer owned by Brazilian billionaire Walter Faria with a 12 percent market share.
The South American beer barons have been here before. In the mid-90s, Lemann, who owned the regional brewing powerhouse Brahma, made an offer to buy the Santo Domingo’s brewery in Colombia, called Bavaria. Violy McCausland-Seve, a New York investment banker who was born in Barranquilla, where the family has roots, said she advised them to say no.
She said the price -- which she wouldn’t disclose -- didn’t value the quality of the management and uniqueness of a family owned company with no succession issues.
“We worked on it for like a year and finally concluded it wasn’t a good transaction,” she said. “We thought the offer wasn’t rich enough.”
Lemann made another try in 2000. Alejandro Santo Domingo was working at Violy, Byorum & Partners, a boutique mergers and acquisitions firm McCausland-Seve founded, when Lemann made the second overture at a meeting in Paris, and the answer was the same. The family decided to continue with their consolidation strategy, buying up breweries in Panama, Peru and Portugal. In 2005, the clan sold its stake in Bavaria to SABMiller.
By then, Lemann had folded Brahma into Belgium’s Interbrew. He used his position as the largest shareholder with three seats on the board to orchestrate the 2008 merger with Anheuser Busch that created industry giant AB InBev. The company’s chief executive officer, Carlos Brito, is a Lemann protege; the billionaire paid for his Stanford MBA. Lemann also put Joao de Castro Neves, AB InBev’s president of North America, through business school at the University of Illinois. Both the executives are Brazilian.
The Santo Domingos also have an AB InBev connection. Chairman Olivier Goudet was backed by the family’s money when he merged the world’s second and third-largest coffee retailers this year as head of JAB Holding Co.
Though they have never made a beer deal, there doesn’t appear to be bad blood. Lemann and Alejandro Santo Domingo -- both Harvard University grads who became rich by consolidating local breweries -- run in similar circles in the worlds of investing and philanthropy. They’re on the same advisory boards at Harvard, Columbia University and the Latin American Conservation Council.
Lemann controls South America’s largest fortune, which is valued at $24.9 billion, according to the Bloomberg Billionaires Index. In second place: the Santo Domingos, with $14.8 billion. Their fortune has swelled by more than $2 billion in recent months as SABMiller’s stock has risen on AB InBev’s interest in a deal.
(A previous version of this story corrected the attribution of the Santo Domingos’ position in the second paragraph.)